Treasury select committee member Andy Love has warned the Government may look to reduce tax incentives on Isas in next month’s comprehensive spending review.
Speaking at the fringe event at the Labour Party Conference in Manchester this week, the Labour MP for Edmonton said 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.”
The current Isa limits are £5,100 for cash and £10,200 for stocks and shares and will be index-linked from next April. Government estimates suggest it spent £2.2bn on Isa tax reliefs in 2008/2009 and £1.6bn in 2009/2010.
Love said: “It is quite hard to see where the incentives to save are going to come from over the next few years and therefore what the role of the Government is.
“They are suggesting they need to create what they are calling simple, transparent and flexible vehicles for saving but they are not suggesting that there ought to be some incentive structures. I would argue very strongly that there need to be incentives built into those vehicles.”