British Banks Call For 100% Increase in Cash ISA Allowance
The chancellor should raise the tax-free savings allowance, according to the British Bankers' Association (BBA)*, as this may encourage more people to save. Currently, each eligible person gets an ISA allowance of £11,520 a year - up to half of which can be saved in cash. However, the BBA has suggested a change in the rules in order to permit people to put their entire allowance into a cash ISA.
Call for flexibility
The BBA also called on the Chancellor to alter the existing prohibition on savers transferring funds from investment ISAs to cash ISAs as this would "support those savers running down their assets to manage investment risk as they approach retirement."
Lifetime ISA limits an unpopular prospect
The BBA also opposed the idea that the Government may impose a limit on lifetime ISA contributions, arguing that: "Any plans to limit the amount that savers can hold in these tax-free accounts risks damaging the ISA brand which has been carefully nurtured as a key part of the UK's long term savings planning."
The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.
* Source: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10456134/Help-to-Buy-will-distort-housing-market-warn-bank-chiefs.html