Budget 2012 - Chancellor misses opportunity to help savers

Thursday 22nd March 2012

Nationwide said it was disappointed that Chancellor George Osborne did not announce an increase in the cash ISA limit in the Budget.

The Society said it had written to the Chancellor calling for an increase to the cash ISA limits, from the start of the new tax year, from £5640 to £11280 - equivalent to the equity ISA maximum.

Many savers prefer the security of cash savings, but the current ISA restrictions mean they are limited on how much they can save tax-free.

One group of people that would be helped by an increase in the cash ISA limit is first-time buyers, many of whom are struggling to find the deposit necessary to secure a mortgage. An increase in the cash ISA limit to £11,280 would have helped first-time buyers save the required deposit faster.

Graham Beale, chief executive of Nationwide, said: "The Chancellor has missed a real opportunity to help savers and first-time buyers.

"The current rules mean savers who prefer the security of cash savings can only save half as much in a tax-free account than equity ISA investors.

"One of the biggest hurdles for people to own their own home is raising the deposit.

"Savers can pay as much as 40% tax on the interest they receive on their money. The chance to save more in a tax-free account would mean they could really boost the amount they have saved.

"I believe the Chancellor should look again at the ISA rules and do more to help those who want to save in a cash ISA."

Tell us your views on the Budget using the comment section below

Mike Jones