Money News
Nationwide Building Society is calling on Gordon Brown to increase the limit on annual ISA savings from the current level of £7,000 to £9,000 - the same amount that could be saved in its predecessor, the PEP, which was replaced by the ISA in 1999.
In an open letter to the Chancellor ahead of Budget 2007, the UK's largest building society points out that the current ISA limits have not been increased at all in almost eight years since they were introduced. This means, at current prices, the £7,000 limit that a saver can invest in a maxi ISA is now worth an equivalent investment of just £5,770 in real terms, and the £3,000 cash ISA ceiling just £2,473. Nationwide believes that increasing the limits to £9,000 would be a fair response to savers' interests and help encourage a more robust savings culture in the UK.
In his letter to the Chancellor, Nationwide's executive director, Stuart Bernau, said, "One in three people benefit from the tax-efficient incentives of ISAs and for many of Nationwide's customers their cash ISA is their main savings account. ISAs have been a savings success story, however the tax breaks for saving simply aren't worth what they were eight years ago and Nationwide believes that it is time to redress the balance and restore the limits to their true value."
The society also wants to see the government introduce fairer rules on tax-efficient savings and investments for children after the Society estimated that, although children can open a cash ISA at 16, as many as nine million youngsters in the UK aged under 18 are too old to qualify for a Child Trust Fund (CTF), but too young to invest in an ISA.
This means that parents who want to save for a child who is too old to qualify for a CTF would find that as the cash sum grew, they would become liable for tax on interest earned above their personal allowance on the investment, which could be costing savers as much as £85 million a year.
Nationwide believes this two-tier system, which can see siblings treated differently in tax terms, is unfair and wants the Chancellor to equalise tax treatment for children, allowing families to save for the future without being penalised.
In addition, as part of its commitment to support affordable housing in the UK and make it easier for first-time buyers to get a foot on the housing ladder, Nationwide is also asking Gordon Brown to take the long-overdue action of increasing the threshold, at which the initial 1% tier of stamp duty tax paid on residential house purchases kicks in, in line with house price inflation. Such a move would take the threshold up to £206,000 from its current level of £125,000, based on the original threshold of £60,000 increasing in line with house prices since 1993.
15 March 2007 © Moneyextra.com
Moneyextra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.