Budget Watch : UK savers
While there are many people in the UK who are suffering during the ongoing recession there is no doubt that savers in the UK have been hit particularly hard. Savings rates have fallen from 5% down to as low as 0% for some savings accounts and despite repeated promises from the UK government no help has been forthcoming as yet. However, as we approach the next budget there is speculation that we could see some action to relieve the pressure being felt by many savers.
There is strong speculation that the Chancellor of the Exchequer will introduce a special pensioner’s tax allowance which will effectively take many pensioners out of the tax system with regards to interest earned on their nest eggs. Some are going as far as to suggest the UK government could abolish the 20% tax rate currently payable on interest on savings, which is rumoured to be worth about £600 million a year to the government – with rates well below 1%. However, as savings rates move higher in the future this will increase the “loss to the government” which could see this particular train of thought abandoned before the Chancellor announces details of the budget. Either way we will see some action on behalf of savers as the UK authorities look to attract as much support as possible in the run-up to the next general election.
