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<p>HM TREASURY</p><p> </p><p> </p><p> </p><p>Tom Blenkinsop MP</p><p> </p><p><strong>MIDDLESBOROUGH
SOUTH & CLEVELAND EAST</strong></p><p> </p><p>To ask Mr Chancellor of the Exchequer,
pursuant to the Answer of 24 March 2014, Official Report, column 12W, on individual
savings accounts and with reference to HM Revenue and Custom's policy paper published
on the new ISA and changes to Junior ISA and the Child Trust Fund, what assessment
he has made of the consequences for (a) the economy, (b) capital markets and (c) business
of a shift in savings portfolio composition away from securities towards cash. 193987</p><p>
</p><p><strong>DAVID GAUKE</strong></p><p>From 1 July 2014 the overall annual New
ISA subscription limit will be increased to £15,000 and can be used for either cash
or stocks and shares investments, or any combination of the two, up to this limit.
At the same time the annual Junior ISA and Child Trust Fund subscription limits will
be increased to £4,000.</p><p> </p><p>These measures were part of a wider Budget packaged
aimed at supporting savers. These ISA measures will reduce income tax on savings for
people constrained by the current limits, improving incentives to save and increasing
real household disposable incomes. Over 6 million people each year are expected to
benefit from these increases, including over 5 million adults currently constrained
by the cash ISA limit, three quarters of whom are basic rate taxpayers and a third
are pensioners.</p><p> </p><p>As HMRC's published Tax Information and Impact Note
explains, the increase to real household disposable incomes resulting from the New
ISA changes might feed through to higher consumption or savings in the household sector.
There may also be a shift in the savings portfolio composition towards cash deposits.
At the same time there may be an overall increase in savings invested in securities.</p><p>
</p><p>Stocks and shares, and cash offer very different risk and expected return profiles,
and the tax treatment will be just one factor affecting investors' choice between
them. In 2012-13, the FTSE All-Share Index grew by 5.6 per cent (excluding dividend
yield). In contrast bank and building society deposit returns averaged 1.95 per cent.</p><p>
</p><p>For individuals who prefer to hold their savings portfolio in stocks and shares
rather than cash, the New ISA will provide a significant increase to the amount that
can be invested and held within the tax-advantaged ISA wrapper for 2014-15, from £11,880
to £15,000.</p><p> </p><p> </p>
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