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Budget 2010 must not harm savers


With new research by the ABI showing that over half the public have lost confidence in the benefits of saving over the last year alone, the ABI is urging the Chancellor not to further harm savers in the upcoming Budget.  Recent Budget changes which have harmed savers include changes to the higher rate tax relief for pension contributions and the change to Capital Gains tax (CGT) which impacted on insurance bonds.


The ABI is also calling for Budget 2010 to help UK companies through a firm commitment to allow profits made in foreign branches not to be taxed when bought back to the UK.  



The ABI asked 2,500 adults about their views on the economy, and how it affected their attitudes to saving.  55% said the benefits of saving had gone down over the last 12 months. Only 11% thought it had gone up.  Worryingly, two-thirds of those asked said they would cope badly financially if they lost their job, indicating a low level of saving.


Kerrie Kelly, Director General of the ABI, said:


"Insurers agree that it is important that the economy is rebalanced by facilitating saving not just relying on debt.  This would help to rebalance the economy. Both consumers and UK insurers need the tax system to treat long-term savings products with greater respect, underpinned by stable rules.  Further changes in the Budget will further harm consumer's attitudes to saving."




With capital and money able to move easily around the world, the pressure on the UK to remain a global financial centre has never been greater.  A major step to ensure this would be if the Chancellor used this Budget to confirm a tax exemption for foreign branches.  This would allow profits made by branches of UK businesses abroad, to be brought back to these shores without further taxation.


Kerrie Kelly, Director General of the ABI, said:


"The UK insurance industry has come through the recession in a strong state. However, insurers are rightly worried about an uncompetitive tax system which harms global businesses based in the UK.  With 2011 the earliest possible date for legislation, we need a clear message from the Chancellor in this Budget on the taxation of foreign branches.  It would help convince companies to be based in the UK, as good news next year may be too late for some."


The ABI is also calling for the Chancellor to commit to selling more index linked and long dated gilts to provide pension fund and insurers with long-term assets.

Last updated 01/07/2016