Treasury's Isa tax credit stance

The Treasury has indicated it will go ahead with plans to abolish the 10% tax credit paid on UK divi...

The Treasury has indicated it will go ahead with plans to abolish the 10% tax credit paid on UK dividends within Isas and Peps in April 2004. In a letter to Isis Asset Management, financial secretary to the Treasury Ruth Kelly said the change is designed to remove a distortion in the tax system that encourages companies to pay their profits as dividends rather than invest them in the business for growth. Removing this distortion should benefit both companies and investors, she added. 'A 10% Isa and Pep payable tax credit is available until April 2004 as a transitional measure to allow i...