Media Centre
Press release
Equity to Cash ISA Transfers the Logical Next Step Says BSA
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Date:
24 Nov 2006
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Economic Secretary, Ed Balls, announced yesterday that transfers between cash ISAs and stocks and shares ISAs will in future be allowed, but only in one direction - from cash to stocks and shares.
The Building Societies Association (BSA) urges that transfers in the other direction also be permitted. As well as representing a consistency of approach, this would make ‘lifestyling’ of portfolios much easier. This was one of the key points made by the BSA in its recent submission to Mr Balls in advance of next month’s Pre-Budget Report.
Adrian Coles, Director-General of the BSA said today:
“The concession announced by Mr Balls benefits only higher rate taxpayers: there is no tax benefit to those on lower incomes holding equities inside - as opposed to outside - an ISA. Cash ISAs give tax breaks to all taxpayers, including those on lower incomes.
“Anyone shifting their cash ISA into equities must be made aware that they cannot reverse the decision. Making transfers one-way-only, as the Minister proposes, means that errors of judgement or bad advice could never be rectified, while still retaining the ISA tax exemptions.
“Allowing transfers from stocks and shares ISAs to cash ISAs would allow savers to diversify their assets and benefit from the lower volatility offered by cash holdings.
“Increasingly, people are seeking, sensibly, to diversify their retirement savings and ISAs are being held for the longer term. As they near retirement, it makes sense for people to increase the balance of cash in their portfolios so as to more closely match their assets and liabilities: so called ‘lifestyling’. Allowing transfers from stocks and shares ISAs to cash would facilitate this.”
- A copy of the BSA’s Pre-Budget Report submission can be viewed on the BSA website here http://www.bsa.org.uk/policy/response/index.htm
- A copy of the Economic Secretary’s speech can be viewed here http://www.hm-treasury.gov.uk/newsroom_and_speeches/press/2006/press_99_06.cfm
- The Building Societies Association (BSA) represents all 61 building societies in the United Kingdom. Building societies have total assets currently exceeding £296billion and hold residential mortgages of almost £188 billion, just under 18% of the total outstanding in the UK. Societies hold almost £191 billion of retail deposits, accounting for over 19% of all such deposits in the UK. The building society sector employs over 46,000 full and part-time staff and operates through just under 2,100 branches
