ABI response to PBR

ABI response to PBR

ABI response to PBR

Overall response

Peter Vipond, Director of Financial Regulation and Taxation at the Association of British Insurers (ABI), commented:

“Today’s measures on Inheritance Tax and Capital Gains Tax should allow more people in this country to save and benefit from their savings, building wealth to address the challenges of later life, and to support the next generation from education to making a home.”

“Inevitably, beneath these high level issues there are various technical changes to insurance which we will need to examine closely, but on first reading look to be appropriate and proportionate.”

Inheritance Tax (IHT)

Peter Vipond, ABI Director of Financial Regulation and Taxation, said:
“The transferring of spouse’s nil rate threshold band is welcome in reducing tax burdens for investors and encouraging saving. This should make it easier for parents to pass on reasonable amounts of wealth to their offspring.
However, we would like to see measures that boost saving in all areas, and not just encourage the belief that housing is the only asset needed. The insurance industry already provides opportunities for the average consumer to save in a tax efficient manner and these should be supported and enhanced.”

Capital Gains Tax (CGT)

Peter Vipond, ABI Director of Financial Regulation and Taxation, said:

“The introduction of a flat rate of CGT of 18% will greatly simplify the tax system for individuals. Combined with the keeping of an annual allowance of £9200 before tax is paid, this should provide encouragement to save beyond the current ISA wrapper.

Simplification

Sarah Knight, ABI Assistant Director Financial Regulation and Taxation, commenting on the abolition of the “inherited estates” rules and the changing of tax treatment by companies holding life insurance contracts with an investment element, said:

“The ABI is behind measures that remove unnecessary legislation. We believe the simplification announced will have the potential to reduce or minimise burdens and complexity for the industry. We are pleased by the early publication of the proposals, allowing insurers time to consider any technical issues arising from the proposals, prior to publication in the Finance Bill in 2008.”

Anti avoidance

Sarah Knight, ABI Assistant Director Financial Regulation and Taxation, said:

“We support any moves by HM Revenue and Customs (HMRC) to close artificial tax arrangements, and clarify the tax treatment of the re-insurance of life risks. The fact that HMRC have published draft legislation now, allowing the industry to consider the technical impact and ensure the legislation does not have unintended consequences for accepted reinsurance arrangements.”

-ENDS-

Notes for Editors

1. Enquiries to:
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Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)
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Erfan Hussain 020 7216 7411 (Mobile: 07712 841 184)
Kelly Ostler 020 7216 7415 (Mobile: 07968 364 302)

2. The ABI is the trade association for Britain’s insurance industry. Its nearly 400 member companies provide over 91% 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 up to a sixth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.

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