As you may be aware from the ISA section in the Savings Adviser.com, ISAs (Individual Savings Accounts) have tax benefits such as they are free of capital gains tax, cash ISAs receive interest tax free as do corporate bond ISAs, stocks and shares, ISAs also receive a 10% tax credit on dividend income received.
However, it is well documented that the 10% tax credit for dividends is due to finsh in 2004. The PEP and ISAs managers association have been continually lobbying for the tax break to continue - but as yet the Treasury remain 'tight lipped'.
Our view:
This will do nothing to encourage people to save more and bridge the 'savings gap' if they reduce the tax incentive.