The Budget produced only a handful of new taxation measures, but they may have far reaching implications.

The government's commitment to the small companies sector appears to show no sign of fading and, in the future, this philosophy could help increase returns for private investors who see themselves as a new breed of venture capitalists.

Equally, the widening of eligible PEP investments and the introduction of flexible annuities reflect the government's concern regarding specific personal financial issues.£The rules regarding tax exempt special savings accounts (TESSAs) are to be extended to allow second-time investors to reinvest £9000 when their first plans mature, provided this is done within six months of the maturity date of the first account.

Although interest rates have fallen since TESSAs were first introduced in 1991, the new provision is attractive enough to encourage a further five year investment, the main advantage of which is the provision of tax free interest.The chancellor also announced the abolition of two schemes which directly affect the smaller saver.

Save as you earn (SAYE) contracts, which allow investments up to £20 per month, have now been withdrawn, although current plans are not affected.

Holders of existing plans should continue applying payments since the returns after five years are equivalent to 8.3% per annum tax free.Also, the National Savings yearly plan will be withdrawn on 1 February 1995, with existing customers able to complete their monthly payments to obtain their next yearly plan certificate.

Both of these schemes have been popular in the past and are likely to be missed.Tax exempt life assurance policies offered by friendly societies received a welcome boost and it will be possible to invest larger amounts into these plans.

The annual premiums which can be paid by each individual will increase from £200 to £270, and from £18 to £25 per month.

Surrender values will be improved and returns from plans encashed early will no longer be restricted to a return of premiums paid.

Providers are now able to offer more competitive returns on early surrender.These plans are ideal for school fees planning and other long term savings due to the tax free status enjoyed by friendly societies.

However, it is important to choose a plan with a competitive charging structure.

From January 1995 this will be disclosed to investors before a contract is entered into, which should help purchasers who shop around.From 6 April 1995 personal equity plans (PEPs) will be able to invest in corporate bonds, convertibles of UK non-financial companies, and preference shares in UK and European Union companies.

To investors in general PEPs, this means access to a particular range of investments which can be specifically tailored to produce a competitive income stream.PEPs were designed to invest in equities and therefore carry inherent risks.

The widening of the range of eligible investments should enable fund managers to reduce the risks to a certain degree and may persuade existing building society investors to venture into PEPs for the first time.

These are likely to be elderly investors and other individuals specifically seeking tax-efficient income.Product providers will no doubt be hard at work designing new products with these investors in mind.

Since the maximum investment remains at £6000 per individual per fiscal year, there may be great interest in the new PEPs, especially if interest rates remain unchanged.The advantageous new regulations concerning personal pensions should take effect by mid 1995 and will enable individuals to defer purchasing an annuity when they retire.

In recent years, annuity rates have been very low, and some individuals have had no choice but to purchase an annuity on unfavourable terms when benefits have been drawn down.

The new proposals mean that personal pension holders can defer the purchase of an annuity until age 75 if necessary, therefore avoiding a potential loss of income.Holders of retirement annuity contracts and executive plans can also take advantage of this new change by transferring their benefits to a personal pension, although professional advice will be required as charges and various other implications need to be taken into account.

The new measures will allow an individual to draw an income from a pension fund broadly equivalent to the annuity which the fund could have provided without actually having to purchase an annuity.

The pension fund can then be left to accumulate until such a time as the annuity rates have improved.Every three years the pension fund will be reviewed to ascertain that it is not being eroded too quickly.

With a little careful planning it should be possible to spread the remainder of the fund among a number of pension funds to reduce the risk of erosion.

Since individuals are still able to take the tax free cash out of the personal pension fund, eg to pay off the capital on a mortgage, the advantages of the flexible annuity should be well received.

This may persuade the government to extend this facility to other pension arrangements in the future.The chancellor added capital gains tax re-investment relief to the 'up front' income tax relief of 20% available on investments up to £100,000 through the enterprise investment scheme (EIS) for small unquoted companies.The new venture capital trusts (VCTs) come into existence on 6 April 1995 and will also enjoy these benefits, but will also enjoy tax free income and capital gains from the trust.

These investments must be held for the full five years to benefit from the 20% tax relief.Individuals may now obtain a total of 60% tax relief on investments up to £200,000 into a combination of both EIS and VCTs if capital gains are re-invested and the 20% income tax relief is attained.

Although the capital gains tax charge can be re-invested, the tax is merely postponed; it will still become due when the investment is disposed of at a later date.

The EIS and VCTs are limited to a maximum investment of £100,000.

The attraction of higher tax relief should not be the overriding factor when investing in unquoted companies since these schemes carry risk.