Pension contributions (Table B)

After the major changes to the pension rules in 2006, this year's Budget contained some relatively minor - but still significant - changes:

• abolition of pension tax relief for term assurance policies (unless the policy was applied for before 14 December 2006);
  

• changes to the Alternatively Secured Pension rules to prevent tax relieved funds being passed on free of tax to family members.
  
  

Individual Savings Accounts (ISAs)

The Government has been consulting interested parties on changes to ISAs. A number of changes were announced, but they do not take effect until April 2008:

• increase in investment limit from £7,000 to £7,200;
  

• increase in limit for a cash ISA from £3,000 to £3,600;
  

• removal of the distinction between mini-ISAs and maxi-ISAs, subject to the overall limit of £7,200pa.
  
  

It is also expected that PEP funds will be brought within the ISA "wrapper", removing the distinction between the two types of investment plans. The detailed implementation of this change has not yet been announced.

Landlords

Landlords are able to deduct 100% of capital expenditure on certain items which enhance the energy efficiency of let property. This relief is extended with effect from 6 April 2007:

• limit of £1,500 per building extends to £1,500 per property (so in a block of flats the limit is significantly increased);
  
  

• scheme will run to 2015 (was 2009).
  
  

At present, the relief is only available to landlords who pay income tax. It is to be extended to corporate landlords from a date to be announced.

Foreign dividends

Dividends from non-UK companies are charged to tax at the same rates as UK dividends - 10% or 32.5%. However, UK dividends come with a notional tax credit of 10% (10/90 of the net dividend), so the tax payable is nil for a basic rate taxpayer and 25% of the net for a higher rate taxpayer.

This treatment will be extended to foreign dividends from 6 April 2008. This tax cut follows from a decision of the European Court that required domestic and foreign investments to be taxed in the same way.

House owned through a company

It is common for UK residents to own real estate in other countries indirectly - a company owns the property and the individual owns the company. This is usually for local legal reasons, but it has been suggested that it could produce a very bad result for UK tax. The owner could be taxed as if the company was providing a benefit in kind.

The law is being changed to make it clear that no such charge should arise in most straightforward situations - where the company is owned by individuals, its major asset is the building and its activities are restricted to owning and letting the building. The change will apply retrospectively.

Islamic investments

"Sukuk" bonds, which are alternative finance arrangements that comply with Shari'a law, will from 6 April 2007 (1 April 2007 for companies) have a tax regime equivalent to normal interest-bearing debt. This applies to both the issuer and the investor.

EIS, VCT and CVS

The main changes announced to Enterprise Investment Scheme, Venture Capital Trusts and the Corporate Venturing Scheme are:

• companies must have fewer than 50 full-time employees at the time the shares are issued;
  

• for an investment to qualify for relief under EIS or to be treated as a qualifying holding of a VCT, the company must have raised no more than £2 million under any or all of the schemes in the previous 12 months;
  

• a relaxation of the requirement that where the trade is carried on by a 90% subsidiary it must be a direct qualifying subsidiary of the parent company.