New Labour to hit savers with new stealth taxes

Savers were last week dismayed when news leaked out about Gordon Brown’s latest stealth tax, this time on life insurance and pension companies.

The chancellor wants to tax the reserves credited to shareholders of these companies, which include such names as Legal & General, Prudential and Norwich Union. Although policyholders will not be directly hit, the companies are likely to turn the screw on customers.

The Association of British Insurers described it as a tax on savings. Coming on top of the notorious £5 billion-a-year dividend tax on pensions, watered-down Isas and the creeping impact of inheritance tax, this will encourage thousands of people to look again at how far they can protect themselves from the Treasury’s tentacles.

Millions more may be affected by a claim by actuaries last week that employers are £130 billion short of the sum needed to pay for final-salary pension schemes, largely because of the dividend tax.


From William Kay at The Sunday Times