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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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 Posted: Sun Oct 07, 2007 1:11 pm Post subject: Calls on the Chancellor to Improve ISA's, Children's Savings |
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Calls on the Chancellor to Improve ISA's, Children's Savings Accounts and Affordable Housing
By: Nationwide
Nationwide Building Society, ahead of the Pre-Budget Report which is expected next week, has called on the Chancellor to make changes and improve the ISA system, children’s savings and housing affordability. The Society is a keen supporter of government initiatives that encourage the savings habit and enable people to get onto the property ladder and hopes Alistair Darling will take the practical steps needed to ensure the Government’s stated aims in these areas are met.
Nationwide has written to the Chancellor and recommended the following:
Individual savings accounts (ISAs)
Nationwide welcomes the Government’s commitment to encouraging and promoting saving through ISAs but believes the system could be simplified and made more flexible. The Society calls for:
the ISA system to be further amended to allow equity ISA holders the option to switch all or part of their investment to cash at any point during the life of the ISA;
cash and equity ISA subscription limits to be equalised;
ISA subscription limits to be regularly reviewed and linked to inflation to ensure their true value is maintained.
Children’s savings
Nationwide thinks the Government can do more to encourage parents, friends and family to save for children whether they qualify for a Child Trust Fund (CTF) or not. Currently, parents whose children do not have a CTF are penalised through taxation if they want to save as much as those that do and 60% of Child Trust Funds haven’t seen any additional contributions. The Society has called for:
the tax exemption thresholds for interest earned on savings for children by parents to be increased as Nationwide estimates that Ł60 million is paid in tax by parents when saving for their children 1 ;
a further Government contribution of Ł250 when a CTF child reaches the age of 11;
a coordinated Government information campaign, involving the Department for Work and Pensions, the Department for Children, Schools and Families and the Financial Services Authority, so that parents are reminded to invest their vouchers and to encourage additional contributions of even small amounts.
Affordability and Housing
Nationwide welcomes the aims of the Housing Green Paper, and the commitment from the Government to address both the chronic shortage and affordability of housing in the UK. The Society would like to see the Government work with lenders to tackle the shortage of housing in the UK and address the affordability problem and calls for:
the Government to continue working with the industry to review and develop shared equity schemes that make a real difference to would-be home owners;
further assurances from the Government that funding for the Low Cost Home Ownership programmes will be forthcoming; a reform of stamp duty to reduce its burden on first-time buyers.
Graham Beale, Nationwide’s chief executive, says: “Alistair Darling has an opportunity to introduce changes that can make a real difference to people’s wealth in his first Pre-Budget Report as Chancellor. The ISA system has proved to be a success with over 16 million 2 accounts in operation, but more can be done to encourage consumers to use their ISA allowance and embrace the tax-efficient benefits they bring. To build a savings habit in younger people, Nationwide, which is one of only a few providers to offer both cash and equity Child Trust Funds, would like to see Alistair Darling encourage more parents to contribute to the funds. The Government also has a chance to help as many people as possible to take their first step onto the housing ladder, and this is a step that would be well worth taking.”
Notes
1 Calculated in 2006: assuming an interest rate of 4.95%, if a parent/guardian pays Ł1,200 into a child’s savings account and there are no withdrawals, by year two the parent will become liable for income tax on those savings.
2 Over 16m customers hold ISAs; Mintel Report June 2007
http://www.nationwide.co.uk/ |
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