ISA savings system shake-up urged

 

The ISA savings system should be revitalised to help shelter beleaguered savers and struggling first-time buyers from taxation, campaigners have said.

Savers have been experiencing the "perfect storm" of an all-time low bank rate giving them little real return on their cash pots, combined with high living costs and tough employment conditions.

From April, £11,280 can be invested in a stocks and shares Isa, and up to half of this (£5,640) can be saved in a cash ISA.

But Nationwide is calling for Chancellor George Osborne to raise the cash ISA limit to £10,680, double its current limit, to help savers concerned about the erosion of their income caused by inflation as well as first-time buyers trying to save a typical 20% deposit.

An increased ISA allowance could help offset the blow being dealt to first-time buyers later this month with the ending of a two-year stamp duty concession for this sector of the market.

Graham Beale, chief executive of Nationwide, said: "Many savers prefer the security of cash savings, but the current Isa restrictions are limiting the amount they can save tax-free.

"If the cash ISA limit is increased to £10,680 from its current limit of £5,340 it will not only help savers address the inflationary pressures, but also help borrowers struggling to raise a deposit."

The typical savings interest rate has plummeted from 6.52% in 2008 to less than 3%, while current account customers have increasingly found they are earning no interest at all as several banks have slashed interest rates to zero.

More than £100 billion is sitting in accounts which are paying no interest, according to Bank of England figures, compared with around £15 billion to £20 billion in the years before the financial crisis.

Ros Altmann, director-general of over-50s group Saga, said low interest rates and quantitative easing have hit annuity rates, resulting in more than a million pensioners buying an annuity which will give them a lower pension for the rest of their lives.

She said: "At the very least, we call on the Chancellor to extend the ISA allowance in his forthcoming Budget to enable savers to shelter what's left of their savings income from additional taxation."

The Building Societies Association (BSA) said it seemed "illogical" to set the cash Isa limit at half the overall allowance, "giving those nervous of stocks and shares access to only half of their annual Isa allowance".

The body said transfers should be permitted from stocks and shares ISA to cash ISAs, something which can only happen in the opposite direction under current rules.

The BSA said: "This change would make adult ISAs consistent with the new Junior ISA. It would allow savers, particularly those approaching retirement, to transfer into less volatile cash investments, protecting their nest egg."

PA

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Account Manager (Junior)

Negotiable: Clearwater People Solutions Ltd: Account Manager (Junior) Account ...

Solar Business Development Manager – M&A

£50000 - £60000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Accountant,Reconciliations,Bristol,Bank,£260/day

£200 - £260 per day + competitive: Orgtel: Accountant, Reconciliations, Bristo...

Test Analyst

£20000 - £30000 Per Annum: Clearwater People Solutions Ltd: An experienced Tes...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried