Savers face ‘stealth tax’ on endowment policies

NEARLY 10 million savers face a raid by the Treasury under a new “stealth tax” on endowment policies which was buried in the Budget.

Consumers saving into these policies will be hit by the levy, which will earn the Government £500 million, according to former pensions minister Steve Webb. Previously HMRC took a slice of any annual increases in the savings pot, after inflation. Now the entire increase is to be taxed, meaning each policy holder paying around £50 more.

Mr Webb, now director of policy at pension firm Royal London, said: “This is a stealth tax on millions who have made sacrifices and saved hard. This is not a tax on fat cats or City firms but on people who have done the right thing. The Government needs to think again. about this policy.”