News: Press Releases:
Chancellor discourages cash savings ­ from 5 April 2005

11 October 2004

"Despite the increasing need for long term savings to be highlighted by the AdairTurner report on pensions due tomorrow, changes in the law already announced by the Chancellor will severely discourage new long term cash savings from 6 April 2005," said Steven Bruck, Partner in Chartered Accountants, Blick Rothenberg.

"Since 1997 it has been possible for individuals to save up to £3,000 per year in a mini cash ISA" which allows interest to be earned tax-free in a simple building society or bank account. From 6 April 2005 the limit is to be slashed by two-thirds to just £1,000 per year" said Bruck. " This a major blow to savings at a time when simple cash deposits represent an attractive alternative to discredited pension funds, where millions have lost so much money. Many people wishing to save for their pensions prefer the safety and accessibility of cash ISA's to complex pension fund arrangements".

"I really can't understand why the government is doing this at a time when savers have lost faith in so many financial institutions. A simple Building Society or Bank tax-free fund remains attractive to all savers. The drastic reduction in tax-free savings possibilities follows from legislation introduced a number of years ago. In his Budget in 2000 the Chancellor was proud to have delayed introduction of the new lower limits of £1,000 until April 2005, but this reduction now can be justified only as a means of raising tax revenues.

It is to be hoped that the publicity following the Adair report will cause the Chancellor to think again. Now is surely the time to encourage, not discourage, savings. Also some consistency and stability would be helpful, rather than this chopping and changing".

For more information please call David Barzilay or Lizzie Jordan on +44 (0)20 7486 0111.

EDITOR'S NOTE:
Blick Rothenberg's client base includes a wide range of private sector companies in a variety of industries as well as professional firms and charities. This breadth of clientele means that they have practical experience of all accountancy issues ranging from UK tax and audits to acquisitions, disposals of businesses and international taxation. They also provide all-round taxation, accountancy and other financial services to their personal client portfolio.
Blick Rothenberg is authorised & regulated by the Financial Services Authority to carry on investment business.