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Budget 2014: 12 predictions
by Michelle McGagh on Mar 17, 2014 at 09:10
ISAs are big business in the UK, with 24 million – or nearly half – of the adult population holding one, due to their generous tax breaks. But as with any tax break, it lives in fear of a clamp down.
Accountants Baker Tilly predicted the chancellor could introduce a lifetime cap on ISA allowances, without forecasting what that cap could be. This is based on previous Treasury interest in a cap.
‘Officials from the Treasury discussed this with financial services executives prior to the 2013 Autumn Statement,’ said George Bull of Baker Tilly. ‘This met with some opposition but it is still possible… Large tax-free investments are vulnerable to the threat of taxation.’
An Isa cap would have to be set at a pretty high limit, as someone who has saved the maximum every year since inception would now hold around £130,000.
‘ISAs are a legitimate tax-favoured product used by millions of individual taxpayers,’ he said. ‘Many ordinary investors who have invested up to the existing annual limits could be affected by a cap which would effectively be retrospective.’
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