Labour's Andy Love warns of Isa cuts
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Treasury select committee member Andy Love has warned the Government may look to reduce tax incentives on Isas in next month’s comprehensive spending review.
Speaking at the fringe event at the Labour Party Conference in Manchester this week, the Labour MP for Edmonton said the Government may target Isas as part of its package of cuts.
He said: “We have seen the coalition cancel Child Trust Funds and the Savings Gateway which were two of the primary incentives that were offered under the previous government. There is also a debate over Isas and while the coalition is saying they are supportive of Isa structures there have been a lot of rumours that they may be subject to the spending review.”
The current Isa limits are £5,100 for cash and £10,200 for stocks and shares and will be index-linked from next April. Government estimates suggest it spent £2.2bn on Isa tax reliefs in 2008/2009 and £1.6bn in 2009/2010.
Love said: “It is quite hard to see where the incentives to save are going to come from over the next few years and therefore what the role of the Government is.
“They are suggesting they need to create what they are calling simple, transparent and flexible vehicles for saving but they are not suggesting that there ought to be some incentive structures. I would argue very strongly that there need to be incentives built into those vehicles.”
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Readers' comments (22)
John Blackmore | 29 Sep 2010 11:04 am
As pensions are basically pointless for the basic rate tax payer with no employer contribution ISA ( stocks & Shares) is the only way left for the ordinary investor to invest with a reasonable long term incentive.
Would the coalition really be daft enough to reduce ISA levels ? Perhaps they don't want a second term ?
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Steve Laird | 29 Sep 2010 11:08 am
Conference season posturing by Labour. Not a cat in hell's chance.
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David Parkinson | 29 Sep 2010 11:25 am
John Blackmore,
Can you tell me why pensions are pointless for a base rate tax payer?
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Julian Stevens | 29 Sep 2010 11:48 am
Agree with Steve Laird. From where are all these rumours supposed to be emanating anyway?
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Leslie Squires | 29 Sep 2010 11:50 am
I agree with Steve Laird. Can you imagine the effect this would have on the savings gap?
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Anonymous | 29 Sep 2010 11:56 am
I can see cash interest being targeted. Not a big cost to investors while rates are low, but should they rise.......... Last time I checked, the basic rate tax on dividends was the same inside an isa as out of it.
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Anonymous | 29 Sep 2010 11:59 am
Let's be honest, the tax relief on ISAs is a good marketing ploy but makes virtually no difference to any savvy investor. ISAs just keep the administration (reporting to HMRC that you have received 10p in interest/dividends) less onerous.
Any estimate of cost to the government is hugely exaggerated !
Anyway, if this government does anything to harm the last incentive left to save for the future then it is as stupid as the last bunch of morons. Also remember, that without investors putting money into stock-and-shares ISAs, less money will be available for corporate-UK to grow.
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Darren | 29 Sep 2010 11:59 am
when you consider that it was a conservative chancellor that created the tax incentives that now live on in the form of ISAs (Lord Lawson in the 1980s with PEPs and TESSAs) it seems highly unlikely that a conservative administration would remove them!
i agree, more labour posturing. they'll blame the weather on the government next... oh they already have as an effect of the proliferation of oil/gas/nuclear/CO2 on the environment!
what a joke!
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Anonymous | 29 Sep 2010 12:08 pm
Pensions are pointless for BR tax payer, WHY???
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Colin Palmer | 29 Sep 2010 12:55 pm
I knew him when he was a lowly member of the Labour Party in Enfield 20 odd years ago and he didn't make much sense then either!
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