Bill unveils changes to CGT and VCT rules
Tax legislation announced in the government's Finance Bill 2011 will increase personal allowances, cut capital gains levies and make investing in small companies more attractive.
Personal allowance on income tax will increase by £1000 to £7475 in this tax year, rising to £8105 in 2012/2013. The basic rate of income tax will be set at £35,000, rising to £34,370 from 6 April 2012, bringing more low-earners into the 20 per cent tax bracket.
From this year, the government has also pledged to begin a consultation on overhauling income tax and national insurance into a single rate, making the real rate of income tax more transparent.
Annual exemption amounts for capital gains tax will increase to £10,600 this tax year, while the lifetime limit on gains qualifying for entrepreneurs' relief will increase to £10m from £5m.
Investors in enterprise investment schemes and venture capital trusts will find their rate of income tax relief increasing from 20 per cent to 30 per cent from 6 April this year.
In 2012/2013, the Treasury will increase the maximum amount that can be invested each year through a VCT or EIS schemes in an individual company to £10m, and the annual amount that an individual can invest through EIS to £1m.
Matthew Rich, IFA for Bath-based Alan Seward Financial Services, said: "The EIS is the most exciting thing in the Finance Bill. We have already had inquiries from people about EIS in the last few days, which we normally would not get. Encouraging small companies will help boost the economy, while investors will benefit from attractive tax breaks."
