Commenting on today’s announcement by the Chancellor of radical changes to ISAs and the introduction of a new pensioner bond, Greg Limb, tax partner at KPMG, said:
“These measures announced today are obviously great news for savers who have been suffering for the last five years or more in a low interest rate environment. Individuals will now be able to save almost three times as much cash into an ISA and not pay any tax on their interest."
“Pensioners also received a double benefit with the introduction of the pensioner bond and enhancements to the starting rate for savings income. Given the reductions in the bingo tax, this must make it a good day for pensioners!"
“However given the Chancellor’s statement that this is a Budget for ‘makers, doers and savers’, the above measures mainly reduce the tax impact on savings income rather than boost the income itself. That said, the pensioner bond, although limited in the amounts that can be invested, is likely to produce above market rates of return."
“Is the Chancellor going out of his way to help savers now because he does not see any prospect of interest rates rising any time soon? Pessimists will see this as a sign that we are stuck in a low interest rate bubble.”
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Chancellor’s Budget 2014
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