Are there any tax incentives for stockmarket investment?
Since the mid 1980s, the Government has been keen to encourage stockmarket investment. However, the incentives offered under Labour are less generous than those originally offered by previous Conservative governments. Personal Equity Plans (PEPs), introduced by the Conservatives, ensured that you could receive your dividend income free of tax and also offered an exemption from capital gains. PEPs were replaced by Individual Savings Accounts (ISAs) by the Labour Government in 1999 with broadly similar tax breaks but lower limits on annual investments and less attractive tax benefits. As a result of changes to the taxation of company earnings, ISA and Personal Equity Plan (PEP) investment managers may no longer reclaim any tax credit on dividend income. However, while the attraction of equity based ISAs for basic rate taxpayers is now limited to freedom from capital gains tax, higher rate taxpayers will still find investing in a stocks and shares ISA tax-efficient. The reason for this is
