SIX LEADING TRADE ASSOCIATIONS JOIN FORCES IN FINAL CALL TO SAVE THE ISA TAX CREDIT
“Tax benefits for the many, and not the few” was the call today from six city Trade Associations who have teamed up in an appeal to the Chancellor Gordon Brown to retain the tax credit on the Equity ISA.
The PEP and ISA Managers’ Association (PIMA) and the Investment Management Association (IMA), have joined together with the Association of Private Client Investment Managers and Stockbrokers and European Association of Securities Dealers (APCIMS), the Association of Investment Trust Companies (AITC), and the Association of Independent Financial Advisers (AIFA), and Proshare (the independent organisation that promotes wider share ownership and financial education), to ask the Government not to abolish the tax credit for the Equity ISA.
From April 2004 the Government has said it will abolish the 10% tax credit that ISAs receive on dividend distributions. By removing the tax credit, investment in stocks and shares ISAs will only remain attractive to higher-rate taxpayers. The Associations taking part believe the Government will be disadvantaging lower income groups from saving in an ISA.
The trade bodies have sent a joint letter to the Chancellor, and a briefing document to MPs, explaining the reasons why the dividend tax credit should not be abolished. In addition, the Associations are seeking an urgent meeting with the Chancellor to discuss the effect abolition would have on savings.
Tony Vine-Lott, Director General of PIMA said: “We have been campaigning against the abolition of the tax credit for the past year and want to caution the Government that abolition would seriously undermine ISA saving. Our research shows that if the tax-free benefit on stocks and shares ISAs is reduced or abolished, only a third of existing customers would continue to invest in these products”
Richard Saunders, Chief Executive the IMA said: “At a time when the Government are trying to encourage the savings habit at all income levels, it seems perverse to remove a tax-benefit for those on lower incomes. ISAs have been a great success, and we hope that the Chancellor will reconsider their tax status and keep it as a benefit to the many, and not just the few.”
Angela Knight, Chief Executive of APCIMS-EASD, said: “Removing the tax credit sends all the wrong signals to savers at a time when people are more tempted than ever before just to keep their money under the bed."
For further information and comment, please contact:
Tony Vine-Lott, PIMA 07790 006 108
Richard Saunders, IMA 020 7831 0898