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Tax Allowances: Personal Savings

Volume 490: debated on Friday 27 March 2009

To ask the Chancellor of the Exchequer what plans he has to increase the uptake and availability of tax-free regular savings among (a) those on low incomes and (b) senior citizens. (267389)

The Government are committed to doing more to raise levels of financial capability across the population, ensuring people are able to make informed financial choices, including about saving, and develop the skills and confidence to manage their finances effectively.

The Saving Gateway, a cash saving scheme that aims to kick-start a saving habit among working age people on lower incomes and promote financial inclusion, will be introduced next year.

Account holders will be able to deposit up to £25 a month for two years, and the Government will contribute 50p for each pound saved in the scheme. The Government contribution, and any other return on Saving Gateway accounts, will be tax-free.

Every adult also has an annual individual savings account (ISA) allowance of £7,200, £3,600 of which can be saved in cash. ISAs are tax-free, and the current ISA limits mean that the majority of people can hold all of their savings in a tax-efficient way.