Article date: 7 December 2004
New stealth tax on with-profit funds must be scrapped
Norwich Union, the UK’s largest insurer,is calling on The Treasury to scrap the latest stealth taxproposals, announced in the pre-Budget statement on 2 December.These proposals will impact on customers’ with-profitssavings and have been described as "the closure of a tax loophole."The consequence of these proposals is potentially lower returns topolicyholders in with-profit pension, investment and endowmentpolicies.
The detailed implication of these new proposalsis an increase in the amount of tax that has to be paid on the freereserves supporting with-profits policyholder funds. This couldlimit the freedom of these funds to invest in equities, which arelikely to offer better long-term investment prospects.
Gary Withers, chief executive of Norwich UnionLife, said: "This is simply a piggy bank raid on the funds whichsupport our customers savings policies – there is no otherdescription for it. While this may look like a tax on the company,it is essentially a policyholder tax.
"This proposal seems completely inappropriate ata time when we are trying to rebuild trust in the savings industryand get people to save. It is very difficult to see how this isconsistent with the principle of treating customers fairly which isactively promoted by the FSA and Government.
"There has been no warning of this proposalwhatsoever and we are calling on the Treasury to scrap this latestproposal."
Press office contacts:
James Evans01904 452791 / 07800 699525
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Notes to editors:
- Norwich Union is the UK’s largest insurer. It is aleading provider of life, pensions and investment products and oneof the leading IFA providers. IFAs provide around 75% of thecompany’s long-term savings business
- Norwich Union has strategic alliances with building societiesand other leading UK brand names including Tesco Personal Financeand The Royal Bank of Scotland Group
- Norwich Union’s news releases and a selection of imagesare available from Aviva's internet press centre at www.aviva.com/media.