The Association of British Insurers is to meet with the Treasury on Tuesday to discuss the implications for the life industry arising from Chancellor Darling’s introduction of a flat rate of capital gains tax.
As revealed by Money Marketing last week, the Chancellor’s pre-Budget changes to capital gains tax will damage the insurance bond market and would have huge implications for life insurers.
The ABI says it is aware that the introduction of the 18 per cent flat rate of CGT will raise “issues” for the life industry and says it is meeting with Treasury officials to discuss these tomorrow.
But one anonymous insurer is warning that these tax changes could kill off sections of the life insurance industry, while big name insurers are believed to have lobbied the ABI over this issue.
Hargreaves Lansdown head of financial practitioners Danny Cox says: “The pre-budget report has thrown financial planning into chaos. If the proposed changes go through, the market for both onshore and offshore bonds shrinks massively. The insurers must be very worried. The potential impact of this is huge.”
ABI spokesman Jon French says: “We are aware that there are issues for the life industry in the changes to the CGT regime and will be meeting the Treasury tomorrow to talk about them.”