The largest building society in the UK recently said that the cash ISA allowance should be doubled to match the investment or stock ISA savings limit, industry experts recently remarked.
Major building society Nationwide called for an end to the current £5,340 cash ISA limit, asking Chancellor George Osborne to put an end to this limitation in order to give savers the choice to invest their full £10,680 allowance however they see fit. The personal and business bank account provider has said that it has concerns regarding the current economic situation in the UK, adding that increasing the cash ISA allowance for savers could go far to alleviate their financial burden.
Chief executive for Nationwide, Graham Beale, remarked that Chancellor Osborne has a real opportunity to aid both savers and borrowers alike if he decides to institute the change later this month in the Budget. The building society noted that savers have concerns that inflation will impact their savings in a negative manner, especially since the current inflation rate remains far above the target set by the Monetary Policy Committee – though inflation rates have begun to finally fall.
Many first-time buyers would benefit from raising the cash ISA cap, Nationwide said, as those currently struggling to raise the cash for a mortgage deposit are suffering from being caught in cycles of high-cost renting. The building society suggested that raising the cash allowance to 100 per cent of the yearly limit would encourage these first-time buyers to build up more weighty deposits quicker than otherwise.
Mr Beale said that many savers prefer cash savings due to their security, yet the current restrictions on tax-free savings limit the amount they can save for the future. The chief executive added that raising the cash ISA limit will not only allay the fears brought on by inflation but also act to aid borrowers currently struggling to raise deposits.