Rock’s ISA savers get money back

Oct 19 2007 Evening Gazette

SAVERS at crisis-hit bank Northern Rock who lost tax-free savings benefits by withdrawing money from ISAs will have these advantages restored, the Government has announced.

People who withdrew money from tax-free ISAs at Northern Rock during the panic will be able to re-deposit the cash in an ISA with Northern Rock or another provider, it said.

ISAs enable people to save money without having to pay tax on the returns they make, but under current rules people can only pay £3,000 into a cash ISA each tax year.

People who had been saving into an ISA at Northern Rock for several years may have withdrawn several thousand pounds in cash, but they would only be able to reinvest a maximum of £3,000 into an ISA this year.

Customers rushed to branches, including Middlesbrough’s Linthorpe Road site, last month to withdraw money as the bank announced it had agreed emergency funding from the Bank of England after being rocked by the credit crunch in financial markets

Economic Secretary to the Treasury Kitty Ussher said: “To ensure Northern Rock ISA savers are not penalised by the financial instability in the market, I can announce in these exceptional circumstances, the Government will allow the people affected to re-invest their money into any cash ISA, including Northern Rock’s, and restore their tax advantages.”