TaxPersonal TaxTories propose return of the dividend tax credit

Tories propose return of the dividend tax credit

The Conservatives are proposing to bring back the dividend tax credit for pension funds, the Shadow Chancellor said yesterday (Tuesday).

Link: Women missing out on pensions

The move, which would reverse Gordon Brown’s controversial 1997 decision to scrap the tax credit on dividends from shares held by pension funds, would cost the Treasury about £5 billion a year.

The Tories said the suggestion was one of a number of plans being considered and was not necessarily an election pledge. However, it is good news for pension savers and investors, as Labour’s scrapping of the credit has largely been blamed for hastening the decline of private and occupational pensions.

The plan is part of a raft of Tory proposals put forward yesterday to encourage saving in the UK.

Mr Letwin was quoted in The Times as saying: ‘Conservatives believe that the tax system should encourage people to save for the future – not penalise saving’.

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