Junior tax minister Hans Vijlbrief has scrapped his predecessor’s plans to shake up the way savings and assets are taxed, which would have meant no asset tax bills for 1.3 million people.

The government currently uses ‘fictitious interest rates’ of upwards of 2% to decide how much income people have from their assets, even though most savings accounts have interest rates of around zero.

Under the new set-up, which would have come into effect in 2022, assets would have been divided into three categories – savings, investments and debt – and savings up to €440,000 would have be virtually tax free.

But this change would have been offset by a rise in the tax on investments to 5.33% – a move which had created a storm of protests. ‘It would also have been shot to bits legally,’ Vijlbrief said.

The minister told MPs he plans to come up with a revised, and simpler plan, this summer.