Chancellor Gordon Brown's decision to push through the abolition of the 10 per cent Isa dividend tax credit has been resoundingly criticised by fund managers and trade bodies.
The absence of comment on Isas in the Budget other than a general statement endorsing the product has been interpreted by the industry as confirmation the tax credit will disappear as anticipated at the beginning of the 2004 tax year.
Fund companies say the Chancellor has kicked the savings industry in the teeth at a time when investor sentiment is at an all-time low and ensured that Isas will be only purchased by the rich.
The Pep & Isa Managers' Association says both the Conservatives and Liberal Democrats are vowing to fight the decision when the Finance Bill goes through Parliament. They are promising to table amendments in an attempt to force the Government to take action.
Invesco Perpetual chief executive Mike Webb says: “This is just another kick in the teeth for those who are trying to provide security for their retirement.”
Pima director general Tony Vine-Lott says: “The campaign goes on and we will be fighting a vigorous parliamentary campaign during the passage of the Finance Bill to retain the tax credit savings incentive.”
A Treasury spokesman says: “Dividend tax credits were abolished across the board in 1997 except for the Isa credit which was extended to 2004 as a transitional measure.”