Budget statement fails to address the imbalance of taxation of investment products

Article date: 12 March 2008

  • Norwich Union remains firmly committed to customer benefits of bonds

Norwich Union, the UK's largest insurer, is disappointed that in the Budget statement, the Chancellor did not announce any moves to address imbalances of taxation of investment products. The imbalance came about as an unintended consequence of changes to Capital Gains Tax (CGT) originally announced in the Pre-Budget Report.

David Barral, marketing director of Norwich Union Life, said: "It's hugely disappointing that the Chancellor has ignored the concerns and views of the industry and has instead chosen not to redress the imbalance of taxation of investments brought about by his changes to CGT.

"Investment bonds will continue to offer benefits such as tax-efficient withdrawals of up to 5% per annum, and act as an effective solution to reduce inheritance tax when placed into trust. They are popular, offering customers the choice of funds and flexibility they need for their long term savings. However the changes to CGT will mean that bonds for some customers will be at a disadvantage from a tax point of view compared to other investments.

"At a time when we should all be working to create an environment to encourage customers to save for the future, this introduces uncertainty for customers and reduces consumer choice. Norwich Union will continue to press the Government for a level playing field."


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Notes to editors:

About Norwich Union
Norwich Union is the UK's largest insurer. It is a leading provider of life, pensions and investment products and one of the largest financial adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.

Norwich Union's news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media.

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