A new ‘Isa Warehouse’ structure combining pension, long term savings, long term care and help to buy products under a single annual contribution allowance is under serious consideration by the Treasury, Corporate Adviser understands.
The proposed Isa Warehouse is one of two front-runner proposals to replace the current system of pension tax relief at the investors marginal tax rate. The other option is understood to be either a flat rate of tax relief at either 30 or 33 per cent.
The Treasury consultation into pension tax incentives closes tomorrow.
Centre for Policy Studies fellow Michael Johnson says: “Three quarters of the tax take is ring fenced by the Prime Minister so there is only so much that George’s Osborne can do. He has to reduce the deficit of £87 billion by the end of this Parliament.
“So the only thing left is the tax reliefs. And the easiest of the reliefs to attack the lowest hanging fruit, is pensions tax relief.
That’s why we may get the Treasury designing an Isa Warehouse which houses the different sorts of Isa we already have, the saving and investment Isa and the homebuying ISA plus a pension Isa and a long-term care Isa. All of these would then have a unified annual contribution allowance.”