Treasury waiver for Northern Rock Isa withdrawals
by Gill Montia
Northern Rock customers who withdrew savings from tax-free savings accounts in last month’s run on the bank will be allowed to re-invest their money, without losing any tax advantages.
Last week the government guaranteed savings held by the bank, including any deposited after 19th September, but the rules on individual savings accounts (Isas) stipulate a £3,000 annual limit on deposits, therefore an investor who has used up his or her allowance cannot normally reinvest money that has been withdrawn.
The news will benefit Northern Rock savers who withdrew money from Isas rather than arrange a transfer to another provider.
Kitty Ussher, secretary to the Treasury, has confirmed that the decision to allow reinvestments was made in “exceptional circumstances” and would apply to savers who withdrew money from Isas held with Northern Rock between 13th and 19th September.
However, they must pay the money back in a tax-free account by April 5 2008.
Anyone not wishing to reinvest with Northern Rock can obtaining a certificate from the bank showing how much was withdrawn. This can then be presented to their new Isa provider.
Latest figures from the Building Societies Association show record inflows in September, with deposits of £2.8 billion, almost £1 billion more than the previous record high.
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