Page 9 - Budget Newsletter - March 2023

Over time, substantial sums can build up in ISAs: if you had maximised your ISA investment since
they first became available in April 1999, you would by now have placed over £270,000 largely out
of reach of UK taxes. With the cuts to dividend allowances and the CGT annual exemption from
2023/24, such long-term planning has become more valuable.

Planning Point

The first CTF accounts matured in September 2020 as their owners reached 18. The tax benefits
continue after maturity as a ‘protected account’ until instructions to deal with the monies are
provided. That is just as well because a new report from the National Audit Office revealed that,
in April 2021, there were 145,000 unclaimed CTFs with a total value of nearly £400m – an average
of over £2,700 per account. To trace a missing CTF go to www.gov.uk/child-trust-funds/find-a-
child-trust-fund.

Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EISs)

VCTs and EISs have been subject to many rule changes in recent years. Those reforms changed the
nature of schemes by raising the element of risk, which included the introduction of an explicit ‘risk
to capital’ requirement. This focused the investment made by VCTs, EISs and seed enterprise
investment schemes (SEISs) on young companies where there is a real risk to the capital being
invested, and excluded companies and arrangements intended to provide ‘capital preservation’.

Interest in VCTs, EISs and SEISs has grown as more aggressive forms of tax planning have come
under sustained (and largely successful) HMRC attack and pension opportunities have been further
constrained. In 2021/22, VCT fundraising amounted to £1,122m, over two thirds up on the previous
tax year. Most of the long-established VCTs started their 2021/22 capital raising ahead of the Budget.

The Autumn Statement confirmed that one of the few proposals announced by Mr Kwarteng to
survive would be the extension of the life of all three schemes and, from 2023/24, an increase in the
amount SEISs could raise from £150,000 to £250,000 and a doubling of the annual investor limit to
£200,000.

Planning Point

The most attractive VCT offers can sell out within 24 hours – well before you read about them in
the weekend press. With many offers already open, make sure you let us know as soon as
possible if you want to make any VCT investment in this tax year.

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