UNFAIR ISA RULES!
Thu, 20/03/2008 - 12:03
It gets worse. Under current rules interest earned on cash awaiting investment is not taxed in PEPs but is in ISAs. From April when PEPs become ISAs Interest earned on cash awaiting investment will be taxed.Anyone managing their own PEPs who go liquid from time to time or who have a cash dividend build up will be in for a shock. Of course the merging of PEPs with ISAs is being presented as 'progress', 'more flexible','customer friendly' etc. For PEP holders it is none of those.It is another stealth tax. Sadly the Financial Press has not picked up on this issue. It would be nice to think that some consumer champion will emerge to highlight the issue on behalf of those affected.
Fri, 21/03/2008 - 17:11
To add to my previous submission some quotes from my PEP 'manager'+ more comment.
PEPs will become ISAs .
Interest on cash balances will be paid within your Shares ISA in the normal manner, at the beginning of each month. You should note that the cash balance on your PEP will accrue interest until 5 April without any deductions. After 5 April, the cash balance will be held within your Shares ISA and accrued interest from then on will be liable to the 20% HM Revenue and Customs charge applied to all ISAs under HMRC regulations.
Transfers will be allowed from Cash ISAs to Stocks and Shares ISAs. (This makes the interest from Cash ISAs currently tax free taxable unless one somehow avoids interest accrual –has anyone seen any warnings about this?).
Looks like sleight of hand on one side proclaiming 'Tax Free !' while at the same time finding creative ways to claw tax back.
Complication of the whole administrative process for PEP/ISA managers and individual Investors is thrown in for free.
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Why is it that i can't move my savings in a equity isa in to cash? I understand that from April 5th i can transfer a cash isa into a equity one, but not the other way round! Have spoken to a adviser who could not explain why this is, personally i think it is unfair especially at the momeny when i am thinking my money might be safer as cash. Why is this?