One of the negatives for pension savers is the new annual £50,000 limit on contributions, and this is already causing high earners to look for alternative forms of tax-efficient investment, such as Enterprise Investment Schemes (‘EIS’), which will benefit from changes announced in the Budget.

Like Venture Capital Trusts (‘VCTs’), EIS are designed to encourage investment in fledgling businesses, but whereas VCTs are portfolios of companies, EIS invest in single enterprises.

From April 2012, the maximum gross asset value of companies in which both EIS and VCT will be able to invest will increase to £15m, and for EIS the amount which can be invested will be increased from £500,000 to £1 million. Income tax relief of 30% is now available for both types of scheme and freedom from capital gains tax is on-going.