tax free savings smash and grabRumour reaches us that the government is scheming to make it even harder for people to make good provision for their old age without becoming burdens on the state.

You might be forgiven for thinking that at in the midst of a financial ice age, when savings rates are pegged, seemingly indefinitely, at their lowest rates in recorded history, the thrifty and far-sighted would be left alone to benefit from the meagre crumbs that fall from officialdom’s table.

But it seems you would be wrong: at least, if one newspaper report is to believed.

The Sunday Telegraph reports that the Treasury has been “consulting” the financial services industry on a proposal to cap the tax-free savings that investors can hold in an Isa.

Apparently, there are concerns that too many people are making hay with this tax-free savings vehicle and are becoming “Isa millionaires”.

That’s a claim that does not hold its position under scrutiny.  Only a fraction of Isa investors are as affluent as that.  The average higher amount is £100,000; the level at which, says the Sunday Telegraph, the Treasury is thinking of capping holdings.

But it’s not just Isas in the searchlight: plans are also afoot to reduce the tax-free lump sum that savers can take from the pension pots from 25 per cent to 20 per cent.

Both these proposals would, if implemented, be a kick in the teeth of citizens who keep their money in the UK instead of salting it away in offshore tax havens.

They would mean that we at The Whitehall Partnership would have to work even harder than we already do to help our clients to protect and enhance their wealth without being tempted into complex products, and their associated sky high fees, that few people really understand.

But will either happen?  The story could, of course, be nothing more than a piece of governmental kite-flying.  Think of something to boost tax revenues and then whisper on a no names no pack drill basis to a headline hungry journalist and see what the public response is.

That happens frequently in this age of spin doctoring and media manipulation; which is why a pinch of salt should always be at hand when reading newspapers these days.

On the other hand, UK governments do have form when it comes to this sort of thing.  After all, the Isa was the less generous successor to the Pep (personal equity plan) which proved to be hugely successful and so had to go.

Also, remember that the rules on savings, investments and pensions are drafted by politicians and bureaucrats sitting on generous pension pots funded by the taxpayer and therefore have nothing to lose by making life harder for the rest of us.

There is unlikely to be any significant improvement to the personal finance environment unless ministers and their civil servants are made to buy their own pensions.

Until that happy day dawns, the need for savers to seek good quality, unbiased, cost-effective financial advice from us at The Whitehall Partnership grows ever more imperative.

Our over-riding aim is to protect our clients’ wealth, steer them away from complex and ultimately costly – in some cases, disastrous – financial products, and help them to achieve their dreams of a prosperous retirement, by building tax-free savings.

To arrange a free initial meeting, without commitment, at a time and place of your own choosing, call us today on 0845 43 49 250. We have conference facilities in Birmingham and Worcestershire or we can discuss any financial questions in the comfort of your own home.


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