15 March 2006

• VCTs – new rules must be announced – will the threshold for tax relief be reduced?
• SIPPs – huge amount of detail still awaited before advisers and providers can help and pensioners make pension decisions
• REITs – clarification of rules will impact the property market
• Structured Products – will Notes be taxed as income?
• IHT – could thresholds for IHT ‘free' investments on AIM be set? Will the Chancellor increase the nil rate band from £275,000 to take account of the increase in property values?

The following experts are available to comment in their specialist areas on various aspects of savings and investments which may be affected in the Budget on 22nd March.

VCTs – Lenny Norstrand – 020 7246 1176
VCTs will be addressed without question. The two year period where 40% tax relief has been allowed for investments up to £200,000 - ends on 5 th April 2006. Lenny Norstrand can also comment on Film Schemes and Forestry Funds.

SIPPs and Pensions – Bruce Angus - 01224 578732
‘Pension simplification' is due to be implemented in three weeks time on ‘A' day and a huge amount of detail remains to be clarified, particularly for the Alternatively Secured Pension (ASP) for pensioners over age 75 and on the position of IHT and pension funds. Life company systems are not yet programmed to be able to provide quotations and we expect them to be overwhelmed in April.

Structured Products – Stephen Glazzard - 0121 236 7000
The Rules regulating the taxation treatment of Structured Products issued in note form could be clarified, and there is a danger that in future returns could be taxed as income.

REITs – Tim Green – 020 7246 1059
Again the expected clarification of the Rules for REITs, will have significant implications for both the Commercial and Residential property markets. And if existing Property Investment Trusts choose to convert to a REIT this could create CGT issues for their investors.

Inheritance Tax - Stephen Williams – 0121 236 7000
There is a chance that upper limits may be set for the market capitalisation for new investments to qualify for IHT relief, at say around £100m maximum, thereby increasing the risks to private investors using such schemes to reduce their liability to IHT. We do not expect any changes to EIS legislation. Above all we are hopeful that the IHT free threshold will be increased considerably to take account of the increase in property values.

Brewin Dolphin recently conducted a National Inheritance Survey* which revealed that 23% of adults are not even aware that inherited assets are subject to 40% tax if they are worth over £275,000.

Charlotte Black, Marketing Director at Brewin Dolphin said,

“We are concerned that millions of people are unaware of how hard they are going to be hit with an inheritance tax bill. The liability to 40% tax comes as a nasty shock to an increasing number of families with modest assets and we are calling on the Chancellor to redress this situation in his Budget.

Property prices have increased by 160% since 1997, but the IHT threshold of £275,000 has not kept pace. If the Government had increased the IHT threshold in line with house price increases since 1997, it would now be around £500,000”