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BUDGET 2009 NEWS: Experts warn of admin nightmare from Isa age-cap

Advisers and providers say the Government’s new age limits on Isa allowances will be an administrative nightmare.

In today’s Budget, Chancellor Alistair Darling announced an increase in the Isa allowance to £10,200 for savers aged over 50 years this tax year and next year for all other savers.

According to Technology and Technical founder and director Kim North says the first-time requirement to verify age on Isa allowances will prove a significant burden given the £290bn which is currently held by 18m Isa holders.

She says: “We’ve always had age limits on pensions but we’ve never had them on tax efficient savings vehicles such as VCTs, EIS and ISAs.”

North says the changes will create a generational push and incentive to move money upwards which is at odds to traditional financial planning where it has shifted downwards to the younger generations who had more attractive tax allowances.

She says: “The problem is when you take out an Isa you put down your National Insurance number. They’ve never been bothered by who gave you that money but now all of a sudden anyone with sense is going to hand the money to parents and grandparents over 50.”

North says there are also questions over who will police the information check.

She says: “Will providers be fined if they give someone uneligble the full allowance and the whole Isa rendered as not valid? Does the responsibilty lie on the product provider or on the client and do the administrators chase this information on date on birth?”

Skandia head of tax and financial planning agrees the changes will add bureaucracy for advisers. He says: “It’ll add an element of complexity to the advice process. Whereas it was easier before as you just had the simple £7,200 for everyone, it’ll be how old are you again?”

T. Bailey head of marketing and communications Philippa Gee says: “It is utter madness to exclude the under 50s, particularly at a time when they need to be encouraged to save and plan for their future. 

“Is it because the Government cannot bear the loss of tax on this age group’s investments? I doubt it.  With most people in this country scared of being perceived as ageist in anyway, this is dangerous.”

Hargreaves Lansdown investment Ben Yearsley says: “Why bother messing around having this phased introduction, it complicates things.

“Isa applications have your age on, it’s not that difficult. I disagree that it’ll be an admin nightmare, people should be looking at this as an opportunity.”


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