Treasury financial secretary Mark Hoban has rejected claims the Government is considering reducing tax incentives on Isas in the upcoming comprehensive spending review.
At the Labour conference in Manchester last week Treasury select committee member Andy Love warned 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.”
When asked about Love’s comments by Money Marketing at the Conservative conference in Birmingham this week, Hoban said: “In the Budget we announced plans to increase the Isa allowance in line with inflation.”
When pressed to rule out Government plans to change Isa allowances, Hoban added: “Look at what we announced in the Budget. What more do you need me to say?”
The current Isa limits are £5,100 for cash and £10,200 for stocks and shares which will be index-linked from April 2011. Government estimates suggest it spent £2.2bn on Isa tax reliefs in 2008/2009 and £1.6bn in 2009/2010.
Hargreaves Lansdown investment manager Ben Yearsley says: “This is good news as it is clear the nation needs to save for its retirement. To stop or cut down tax efficient investments like Isas benefits no-one long term.”