Budget 2018: Investors retain their incentives

There was little for stockmarket investors in this Budget, but some of the chancellor's ideas will have an impact. Moira O'Neill discusses them here.

Investors breathed a sigh of relief as the Chancellor maintained the status quo in terms of allowances.

For tax year 2018/19 the annual ISA allowance remains at £20,000, and pension investors can still stash away £40,000. Combining the two, which many investors are advised to do because they have complementary tax advantages, these allowances more than enough for most people to invest a nest egg tax-efficiently.

The tax advantages of shares listed on the Alternative Investment Market (AIM), London's junior market, were expected to be in the Chancellor's line of fire, but escaped. The Association of Accounting Technicians had called for AIM shares to lose their inheritance tax (IHT) exemption.

The AAT said that business property tax relief, which certain AIM-listed shares benefit from, was "not designed as an avoidance measure or to promote AIM-listed shares." To secure the IHT tax break, stocks must be held for at least two years and at death.

And there's another perk for ISA investors who hold Aim shares. Since 2013, AIM shares have been allowed in ISAs, allowing ISAs investors to create portfolios that are free of IHT as well as income and capital gains tax. Investors will be glad not to lose this.

Over the years, chancellors have been fond of meddling with venture capital trusts and enterprise investment schemes, which grant investors appealing tax advantages for investing in early stage companies. But no sign of more with these regimes in this Budget.

Last year we saw unexpected cuts to the dividend tax allowance, reduced to £2,000, but Philip Hammond did not wield the axe further on Monday. It would have been nice to see a reversal of the cut, but on the whole, this budget suits investors.

Investors breathed a sigh of relief as the Chancellor maintained the status quo in terms of allowances.

For tax year 2018/19 the annual Isa allowance remains at £20,000, and pension investors can still stash away £40,000. Combining the two, which many investors are advised to do because they have complementary tax advantages, these allowances more than enough for most people to invest a nest egg tax-efficiently.

The tax advantages of shares listed on the Alternative Investment Market, London's junior market, were expected to be in the Chancellor's line of fire, but escaped. The Association of Accounting Technicians had called for Aim shares to lose their inheritance tax (IHT) exemption.

The AAT said that business property tax relief, which certain Aim-listed shares benefit from, was "not designed as an avoidance measure or to promote AIM-listed shares." To secure the IHT tax break, stocks must be held for at least two years and at death.

And there's another perk for Isa investors who hold Aim shares. Since 2013, AIM shares have been allowed in Isas, allowing Isas investors to create portfolios that are free of IHT as well as income and capital gains tax. Investors will be glad not to lose this.

Over the years, chancellors have been fond of meddling with venture capital trusts and enterprise investment schemes, which grant investors appealing tax advantages for investing in early stage companies. But no sign of more with these regimes in this Budget.

Last year we saw unexpected cuts to the dividend tax allowance, reduced to £2,000, but Philip Hammond did not wield the axe further on Monday. It would have been nice to see a reversal of the cut, but on the whole, this budget suits investors.