Posted: Thu Oct 18, 2007 2:40 pm
Tax rescue for Northern Rock Isa savers
Savers at crisis-hit bank Northern Rock who lost tax-free savings benefits by withdrawing money from Isas will have these advantages restored, the Government said today.
Anyone who withdrew money from tax-free Isas at Northern Rock during the panic will be able to re-deposit the cash in an Isa with Northern Rock or another provider, it said.
Isas enable people to save money without having to pay tax on the interest they receive, but under current rules savers can pay only £3,000 into a cash Isa each tax year.
As a result those who had been saving into an Isa at Northern Rock for several years may have withdrawn thousand of pounds, but they would only be able to reinvest a maximum of £3,000 of this into an Isa this year.
Economic Secretary to the Treasury Kitty Ussher said: 'To ensure that Northern Rock Isa savers are not penalised by the financial instability in the market, I can announce today that in these exceptional circumstances, the Government will allow the people affected to re-invest their money into any cash Isa, including Northern Rock's, and thereby restore their tax advantages.'
Savers who want to put money back into an Isa with Northern Rock must do so by 5 April next year. Those who want to put their savings with a different provider must obtain a certificate from Northern Rock stating how much they withdrew from an Isa and present it to a new group when they deposit their money, also before the start of the new tax year.
Today's announcement applies only to money withdrawn from Northern Rock Isas between 13 September, when it first emerged that the group had agreed emergency funding with the Bank of England, and 19 September when the Government said it would guarantee savers' cash. Those who chose to ignore this assurance will now suffer the consequences.
People will be able to re-deposit up to the whole amount they withdrew, as long as they have not subsequently paid any money into a cash Isa. If they have paid money into a new cash Isa they will be able to reinvest the amount they withdrew minus this sum.
Northern Rock will shortly begin writing to customers affected by today's announcement, sending them the certificates they need to reinvest their cash. People who transferred Isa savings away from Northern Rock directly to another Isa account will be unaffected by today's announcement as they will not have lost any of their tax-free advantages.
Thousands of savers queued into the streets to withdraw money from Northern Rock after it was announced it had agreed emergency funding with the Bank of England, sparking the first run on a bank in the UK for more than 150 years. Some people even continued to withdraw their money after the Government said it would guarantee savings with the bank on 17 September.
Source: thisismoney.co.uk
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Savers at crisis-hit bank Northern Rock who lost tax-free savings benefits by withdrawing money from Isas will have these advantages restored, the Government said today.
Anyone who withdrew money from tax-free Isas at Northern Rock during the panic will be able to re-deposit the cash in an Isa with Northern Rock or another provider, it said.
Isas enable people to save money without having to pay tax on the interest they receive, but under current rules savers can pay only £3,000 into a cash Isa each tax year.
As a result those who had been saving into an Isa at Northern Rock for several years may have withdrawn thousand of pounds, but they would only be able to reinvest a maximum of £3,000 of this into an Isa this year.
Economic Secretary to the Treasury Kitty Ussher said: 'To ensure that Northern Rock Isa savers are not penalised by the financial instability in the market, I can announce today that in these exceptional circumstances, the Government will allow the people affected to re-invest their money into any cash Isa, including Northern Rock's, and thereby restore their tax advantages.'
Savers who want to put money back into an Isa with Northern Rock must do so by 5 April next year. Those who want to put their savings with a different provider must obtain a certificate from Northern Rock stating how much they withdrew from an Isa and present it to a new group when they deposit their money, also before the start of the new tax year.
Today's announcement applies only to money withdrawn from Northern Rock Isas between 13 September, when it first emerged that the group had agreed emergency funding with the Bank of England, and 19 September when the Government said it would guarantee savers' cash. Those who chose to ignore this assurance will now suffer the consequences.
People will be able to re-deposit up to the whole amount they withdrew, as long as they have not subsequently paid any money into a cash Isa. If they have paid money into a new cash Isa they will be able to reinvest the amount they withdrew minus this sum.
Northern Rock will shortly begin writing to customers affected by today's announcement, sending them the certificates they need to reinvest their cash. People who transferred Isa savings away from Northern Rock directly to another Isa account will be unaffected by today's announcement as they will not have lost any of their tax-free advantages.
Thousands of savers queued into the streets to withdraw money from Northern Rock after it was announced it had agreed emergency funding with the Bank of England, sparking the first run on a bank in the UK for more than 150 years. Some people even continued to withdraw their money after the Government said it would guarantee savings with the bank on 17 September.
Source: thisismoney.co.uk
Please post any news stories about IVAs here:
http://www.iva.co.uk/forum/default.asp?CAT_ID=5
See my Blog:
http://ivanews.blogs.iva.co.uk