UK Chancellor of the Excehquer, Gordon Brown's decision to abolish the 10% tax credit on equity- based Individual Savings Accounts (ISAs) has been criticised by two leading representatives of the fund management industry.
According to the Daily Telegraph, Richard Saunders, director general of the Investment Management Association (IMA), and Tony Vine Lott, director general of the PEP and ISA Managers' Association have written to the Chancellor urging him to rethink his decision, which they say will discourage individuals from using equity-based products as part of their savings.
The fund managers claim that the abolition of the tax-free investments will affect up to 12 million people. The prospect of losing the tax break has already led to a 40% slump in the sales of such investment vehicles, according to Saunders and Vine Lott.
Figures released earlier this year illustrate how the market in these tax free investment products has dwindled. In January, whilst total ISA sales totaled £343 million, some £187 million worth of investments were cashed in. £311 million of PEPs were also reportedly cashed in.
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