Chancellor's Tax-Free Savings Schemes Under Review

The UK Chancellor has several reasons to review the current tax-free investments, including the pounds 5.46 billion invested in personal equity plans and the pounds 610m lost in tax revenue. Building societies and insurers are pushing for changes to Peps and Tessas, with the Building Societies Association suggesting the abolition of both and the introduction of a 'personal investment plan'. The industry is united in its desire to encourage long-term saving and develop existing vehicles to meet the needs of future generations. The Association of British Insurers and the Association of Unit Trusts and Investment Funds have also expressed concerns about the current tax regime and the benefits of broadening the appeal of Peps and Tessa accounts.

Key Takeaways:

• The UK Chancellor has announced a review of the current tax-free investments, including Peps and Tessas, due to the pounds 5.46 billion invested in Peps and the pounds 610m lost in tax revenue.
• The Building Societies Association has called for the abolition of Peps and Tessas and the introduction of a 'personal investment plan' with tax-free income and gains.
• The annual investment limit for Peps is currently pounds 9,000, while Tessas have a maximum five-year term with a total investment limit of pounds 9,000.
• The Association of British Insurers has complained about the 'unfair' advantages of Peps over other forms of saving.
• The Association of Unit Trusts and Investment Funds has suggested broadening the appeal of Peps by allowing investors to hold government stock (gilts) and corporate bonds in their Pep plans.
• Pep managers are pushing for the introduction of 'retirement Peps' for those who do not qualify for personal pensions and the ability to taper subscriptions for older people.
• The investment industry is united in its desire to encourage long-term saving and develop existing vehicles to meet the needs of future generations.

Statistics:

• Pounds 5.46 billion is invested in personal equity plans (Peps).
• The loss in tax revenue from Peps is pounds 610m so far.
• Pounds 25bn is invested in Tessa accounts.
• The annual investment limit for Peps is pounds 9,000.
• The maximum five-year term for Tessa accounts allows a total investment limit of pounds 9,000.
• The Association of Unit Trusts and Investment Funds suggests broadening the appeal of Peps by allowing investors to hold government stock (gilts) and corporate bonds.

Sources:

• "Byline: MARIA SCOTT" - The article is an original text provided without a specific date or publication information.
• "Chancellor has several excuses for reviewing the present range of tax-free investments" - The article does not provide a specific source for this information.
• "Building societies point out that investors can put pounds 9,000 a year into a Pep, but can only have one Tessa tax exempt savings account" - The article is an original text and does not provide a specific source.
• "The Building Societies Association has called on the Government to let savers keep their accounts, continuing to receive interest tax-free" - The article does not provide a specific source.
• "The Association of British Insurers also complains that Peps have an unfair advantage in the savings market" - The article does not provide a specific source.
• "The Association of Unit Trusts and Investment Funds (Autif) suggests broadening the appeal of Peps by allowing investors to hold government stock (gilts) and corporate bonds in their Pep plans" - The article is an original text and does not provide a specific source.
• "Pep managers, through their trade body, Pepma, are naturally arguing this year for radical extensions of the plans" - The article does not provide a specific source.