OVER 12 MILLION ACCOUNTS COULD BE DISADVANTAGED BY THE REMOVAL OF THE TAX CREDIT ON ISAS AND PEPS
The PEP and ISA Managers’ Association (PIMA) has sent an open letter to the Chancellor urging him to retain the dividend tax credit on stocks and shares ISAs and PEPs. PIMA believe that in excess of 12 million ISA and PEP subscriptions could potentially be affected by the removal of the tax credit.
However, this figure of 12 million, is not taking into account the number of potential savers that have already been dissuaded by the looming abolition of the tax credit from April 2004.
Recent evidence shows that stocks and shares ISA subscriptions have slumped by 40% in April 2003 compared to the same period last year, in spite of a surge in investment in bonds.
By removing the tax credit, PIMA research has shown that the Chancellor will significantly discourage rather than encourage, equity based savings through ISAs.
Tony Vine-Lott, Director General of PIMA said:
“PIMA will continue to lobby for this recommendation throughout the passage of the Finance Bill. 12 million accounts is a significant amount and the Chancellor needs to recognise that the removal of the tax credit will do more harm than good for consumers and the savings industry alike.”