Brown U-turn on new stealth tax
THE Government has staged a last-minute U-turn on a stealth tax that threatened to deal another blow to shell-shocked endowment and pension savers.
Chancellor Gordon Brown had planned to rush through a tax increase on the surplus in life insurance funds this week. Details were buried in his Pre-Budget Report documents.
The Government backed down following protests from the insurance industry. In a letter to the Association of British Insurers, the Inland Revenue said it would allow time to consult with companies.
The consultation period will now run until the Finance Bill, due after Brown's spring Budget next year.
Gary Withers, chief executive of Norwich Union Life, part of insurance giant Aviva, said: 'This is as good a result as we could have hoped for.'
The rule change would have meant an increase in the tax on the surpluses in life insurance funds from 10% to 30%.
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