Commenting on the announcement in last week’s Pre-Budget of changes to the taxation of policyholder funds in with profits business, Peter Vipond, Director of Financial Regulation and Taxation at the ABI (Association of British Insurers) said:

”Hidden away in the pre-budget report is an attack on policy holder funds in with-profits business. This attack is wrong in principle and wrong in practice.  The Revenue should not, as a matter of principle, try to sneak through a significant tax increase by order rather than through primary legislation.

“This tax hike, which seeks to apply shareholder tax rates to policy holders funds in a with profits business is unfair to customers, and will weaken returns to all policy holders just as these funds are recovering from three years of poor equity markets.

“This tax hike will hit with profits pension funds and many endowment policies, hardly the kinds of policyholder that deserves an extra tax burden as they seek to save for the future.”

-Ends-

Notes

1. Enquiries to: 
    Alan Leaman      020 7216 7440 (Mobile: 07957 482330)
    Malcolm Tarling  020 7216 7410 (Mobile: 07776 147667)
    Lucy Butler        020 7216 7411 (Mobile: 07712 841184)

2. The ABI is the trade association for Britain’s insurance industry. Its more than 400 member companies provide over 97% of the insurance business in the UK. It represents insurance companies to the Government, and to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold more than a fifth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.

3. An ISDN line is available for broadcasts.