Nationwide Building Society has called on UK chancellor Gordon Brown to increase the limit on annual ISA savings from the current GBP7,000 to GBP9,000, the same amount that could be saved in the account's predecessor, the TESSA, which was replaced by the ISA in 1999.
In a letter to the chancellor ahead of the upcoming pre-budget report, Nationwide said that, because current ISA limits have not been increased in the seven years since their introduction, at current prices the GBP7,000 limit investment in a maxi ISA is now worth an equivalent investment of just GBP5,770, while the GBP3,000 cash ISA limit is worth just GBP2,473.
Nationwide has said that, although it welcomes recent UK government proposals to simplify the ISA regime and extend the initiative indefinitely beyond its original 2010 commitment, increasing the limits to GBP9,000 would be a fair response to savers’ interests and help encourage a more robust savings culture in the UK.
In the letter, Nationwide’s executive director, Stuart Bernau, said that, although one in three people benefit from the tax-efficient incentives the ISAs provide, the tax breaks for saving simply aren’t worth what they were seven years ago and Nationwide believes that it is time to redress the balance and restore the limits to their true value, thereby achieving their full potential.
The building society also asked for fairer rules on tax-efficient savings and investments for children, after estimating that as many as 10 million UK under-18s are denied the opportunity to save tax efficiently as they are too old to qualify for a Child Trust Fund but too young to invest in an ISA.
Nationwide also asked Mr Brown to increase the threshold for the initial 1% tier of stamp duty tax paid on residential house purchases, in line with house price inflation. This would take the threshold up to GBP202,000 from its current level of GBP125,000.