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CIS wants Govt to raise insurance Isa limits

CIS is calling on the Government to raise insurance Isa contribution levels if it is serious about creating a level playing field between life offices and fund managers.

The company notes the wide anticipation that the 5 per cent tax deferral rule on life bonds will be axed in the next Budget.

Last year&#39s Sandler review argued that life companies benefited from a more favourable tax regime and suggested scrapping the 5 per cent deferral rule.

But CIS says doing away with the 5 per cent rule would affect both higher-rate basic-rate taxpayers. It would also place an additional admin cost on providers.

The insurance Isa – essentially a tax-efficient with-profits bond – has an investment limit of only £1,000 compared with £3,000 for a mini Isa and £7,000 for a maxi Isa. CIS says it sold 60,000 insurance Isas last year.

Head of communications Russ Brady says: “Creating parity between the life Isa and the stocks & shares component would create a win-win situation. First, it would simplify Isas and, second, it would boost total sales and encourage new market entrants, and finally it would offer lump-sum investors a clear alternative to direct equity or deposit-based vehicles.”

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