Legislation, to be introduced in the Finance Bill 2009, will transfer the process of specifying bonus rates and early leaver rates on sharesave plans and of authorising savings providers from HM Treasury to HM Revenue & Customs (HMRC).
When bonus interest rates change, the legislation will allow HMRC to specify that certain savings contracts using the previous bonus rates will be valid even though they are entered into after the date the new rates come into effect.
This will mean that where bonus rates have been varied or withdrawn, employees will be able to enter into savings contracts at the bonus rate set out in their employer’s savings invitation, even if they enter into their contract on or after the date of the change in bonus rates.
The new legislation will also modernise the sharesave savings process by allowing electronic communications with banks and building societies when issuing revised or updated sharesave notifications with new bonus or interest rates.
The minimum period between a date when a notice with revised sharesave certifications, including interest rates, is issued and the date when the new rates come into force will be reduced to 15 days.
The changes will come into effect on 29 April 2009.