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Government minister says Isas will not face cuts

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.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. As was stated earlier, political posturing by Andy Love.
    How NOT to win friends and influence people.

  2. Do the government realise the banks skim the tax break from all of us? They simply reduce the level of interest they offer on their Cash ISAs compared to other accounts (GO AND HAVE A LOOK FOR YOURSELVES).

    Another big scam that goes unoticed year after year.

    Customers are not treated fairly. There should be a simple ‘kite mark’ (simple stakeholder rule) worked out for Cash ISAs .

    This might include offering the highest levels of interest to ISA savers, or just make sure each account they have on offer, has an ISA option.

    i.e. – do you wish to make use of your Cash ISA allowance when opening this account?

    Northern Rock, Lloyds, HBOS and RBS all do this form of manipulation- what a strange roundabout we are all on!

  3. Universal Child Benefit was supposed to be safe based on the emergency budget, too!

  4. Oh well! If he says that they are alright they are doomed then!

  5. PEP’s and Tessa’s were introduced to get more people to invest in the stock market and then ” simplified ” by Labour to ISA’s but the original concept still stands which is to get more people to invest in the stock market and save more. These needs apply even more today and this Government is not stupid enough to reduce what it categorically needs at this time.

  6. Mark (RDR Rubber Stamp) Hoban MP must be a fan of Gordon Browns ISA con trick as well as the FSA RDR con trick! Someone please tell Hoban that since April 6, 2004, fund managers are no longer able to reclaim the 10 per cent tax credit on dividends that are paid within an ISA. This means that on an equity based ISA a basic-rate taxpayers will receive the same income whether they use an ISA wrapper or not. Therefore an ISA will no longer confer a BR income tax advantage. Tax advantages remain for higher rate taxpayers but that makes up no more that 15% of the earning population.

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