Tories pledge to scrap annuitisation at 75 and hike stamp duty threshold
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The Conservative Party has committed to ending compulsory annuitisation at 75, raising the stamp duty threshold to £250,000 and raising the inheritance tax threshold to £1m if they win the general election.
In a document published today, called A New Economic Model, Shadow Chancellor George Osborne (pictured) puts forward eight benchmarks for Britain by which he wants a future Conservative government to be judged.
The document outlines a number of changes the Tories would make to increase the nation’s savings rate, including creating “Britain’s first free national financial advice service”. The Conservatives say they will work with employers and the industry to support auto-enrolment into pensions and restore the link between the state pension and average earnings to counter the effect of means-testing. This will be paid for by raising the state pension to 66 earlier than planned by the Government.
The Conservatives have repeated previous manifesto commitments to scrap forced annuitisation at age 75 and a previous pledge by Osborne to raise the IHT threshold to £1m. The Tories say they would take nine out of 10 first-time buyers out of stamp-duty by raising the threshold to £250,000.
Under Conservative proposals, the party would also set up a new Consumer Protection Agency to replace the FSA, which would be responsible for protecting consumers of financial services.
To ensure bank stability, the Conservatives would pursue an international agreement to apply an insurance fee on retail banks and prevent retail banks from engaging in large-scale proprietary trading.
Osborne promised to inject more competition into the banking industry by commissioning a competition review, which would inform their strategy on selling the Government’s stakes in nationalised banks. He outlined proposals for a National Loan Guarantee Scheme, using government guarantees to create affordable sources of credit for SMEs.
The Tories also say they would create Britain’s first green investment bank drawing on money currently divided across Government initiatives and private capital to focus on green technology start-ups.
The eight benchmarks against which the Conservatives want to be judged are: to ensure macroeconomic stability, create a more balanced economy, get Britain working, make Britain open for business, ensure the whole country shares in rising prosperity, reform public services to deliver better value for money, create a safer banking system and to build a greener economy.
Liberal Democrat Shadow Chancellor Vince Cable said Osborne’s eight benchmarks are “motherhood and apple pie politics”.
He says: “We all want to see a stable, growing economy. The question is how we get there, and on this the Tories have no answers. The Liberal Democrats want to split up the banks so that taxpayers no longer have to underwrite reckless risk taking.We will create a fairer tax system with an income tax cut which will make work pay for those on low incomes.”
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Readers' comments (27)
David Pealing | 2 Feb 2010 1:15 pm
A common sense initiative that will please many people. Finally, someone is letting people chose as to what they can do with their hard earned savings pots However this will come at a cost to the taxpayer
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Incompetent Regulators Awards Team | 2 Feb 2010 1:19 pm
Some common sense in there I see................. Lets have a bit more e.g. sack all associated with the FSA etc
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Anonymous | 2 Feb 2010 1:22 pm
Don't like any of the parties but let's be honest here - most of us will want to buy an annuity because of the effects of mortality drag and need for income by age 75 unless we are in one of the wealthiest households in the country. The £1m IHT threshold helps only the top 10-12,000 richest households in the country and the stamp duty threshold raise should be limited to owner occupation purchases only not second homes and BTL if they really want to help first time buyers - otherwise prices will artificially rise and go boom and bust again.
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Jason Stather-Lodge | 2 Feb 2010 1:23 pm
nice to see some substance here and the fact that they are sticking to commitments previously made.
It would though be nice to see additional tax breaks for entrepreneurs and use of the tax system to decrease the burden on employers, giving reduced NI and a 10% CT rates in first two years of a business life and for profits below certain levels.
We also need to drive investment in the manufacturing base and further increases in capital allowances to support investment in businesses would be a great way of supporting this.
Good first move though and positive.
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Tony Slimmings | 2 Feb 2010 1:24 pm
Well apart from the hit to my business from lost IHT business I do think it sounds well thought out.
I think the 75 limit on pensions has been outdated for the last two decades so is a no brainer (well for a politician with a brain)
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Julian Stevens | 2 Feb 2010 1:24 pm
Yes, but scrapping compulsory annuitisation at age 75 will be of little if any practical benefit if the level of income that may be drawn from an alternative retirement income product is still dictated by the GAD.
On its own, this announcement doesn't go nearly far enough, and nor does it address the almost as important issue of lack of inheritability (free of tax) of unspent funds in retirement. But it is at least a start. Any step forward from where we are now under Crash Gordon has to be welcomed.
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Anonymous | 2 Feb 2010 1:25 pm
Still sounds like a manifesto for HNWIs, and not the ordinary man in the street who is more likely to buy an annuity rather than worry about the value of his fund at age 75 and any IHT implications. Same old cronyism.
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michael brayne | 2 Feb 2010 1:30 pm
Will “Britain’s first free national financial advice service”. be regulated too?
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Anonymous | 2 Feb 2010 1:32 pm
Thank you Mr Osbourne - I'll be an out of work IFA who can claim their state pension age 100.
But on the bright side I'll have no IHT to pay and caN defer my annuity purchase (just a pitty that I won't have an estate of £1m or the need to defer my annuity purchase like some 90% plus of the UK population!!)
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Rod | 2 Feb 2010 1:33 pm
The sooner the Tories 'show their hand' with regards to the changes they have in mind for the Economy; Taxation and in particular, the Financial Services Industry, the sooner we can start planning for our future.
My 'parting shor' is that anything must be better than this unpopular, unelected and discredited Labour Government!
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