§ Mr. Harry GreenwayTo ask the Chancellor of the Exchequer what is his policy for taxation of income from savings; and if he will make a statement. [28545]
§ Mr. Jack[holding answer 16 May 1996]: The Govnerment have introduced a number of measures to encourage and reward savers. In his last Budget, my right hon. and learned Friend the Chancellor reduced the tax charge on savings income for basic rate taxpayers to 20 per cent. We have also built on the success of targeted savings incentives such as PEPs and TESSAs. Latest figures show that, by March 1995, nearly 6.5 million PEP subscriptions—general and single company PEPs—had been made, totalling over £22 billion. By September 1995, there were nearly 4.5 million TESSAs in existence, representing over £27 billion of savings. Last year, we extended the PEP scheme to allow a wider range of investments, such as corporate bonds, and savers whose TESSAs have matured can now re-invest the whole capital from their first account in a follow-up TESSA for a further five years. Further generous tax reliefs continue to be available to people who save for their retirement by joining tax-approved occupational or personal pension schemes. This year's Finance Act includes a number of improvements to the tax-relieved employee share schemes that are designed to encourage more employees to participate in the success of the companies for which they work.