The Society is keen to encourage a savings habit and enable people to get onto the property ladder and hopes Alistair Darling will take the practical steps needed to support savers and first-time buyers and to stimulate the housing market.
Nationwide has written to the Chancellor and recommended the following:
Changes to Individual Savings Accounts (ISAs) A recent survey by Nationwide found nearly 36 million people, 70% of the population, are still failing to make full use of their ISA allowance.
Nationwide believes an increase in the flexibility and simplicity of ISAs would encourage more people to save and take advantage of the ISA system.
With many consumers concerned about both their job security and the economy in general it is now more important than ever that people have savings to fall back on.
Nationwide proposes the following changes:
Increasing the minimum ISA subscription rate from £7,200 to £8,735 to counter the effect inflation has had on the value of the ISA since its introduction in 1999. Thereafter we would like to see the ISA subscription rate linked to the annual rate of inflation to ensure it maintains its true value.
Allowing people to withdraw from and replenish their ISAs within a single tax year up to the maximum annual limit
Increasing the cash ISA limit to match that of the stocks and shares limit, giving consumers greater choice over how their savings are invested.
Creating a single annual limit which, if not used in full, could be rolled over to subsequent tax years.
A widespread review of stamp duty
Under the current Government, stamp duty yields have increased ten-fold, with 60% of all first-time buyers paying stamp duty by 2007. Nationwide believes the current reduced level of activity in the housing market provides an ideal opportunity for the Government to explore the stamp duty regime with a view to minimising its impact on house buyers and ultimately stimulating the housing market.
In particular Nationwide believes the system would benefit from:
An increase in the nil rate threshold to £250,000, with a flat rate of 1% applied above this limit and the removal of higher rate bands.
A fundamental review of stamp duty, to take place over the next 12 months, to explore aligning stamp duty allowances in line with house price inflation.
Graham Beale, Nationwide's chief executive, said: "We would like to see changes implemented that make it easier and more worthwhile for consumers to make full use of their tax-free savings allowance. Increasing the ISA subscription limit to counter the effect of inflation over the past ten years would provide an added incentive for consumers to save, while increasing the flexibility of ISAs would offer greater support to those consumers who need to dip into their savings or those who are currently struggling to save their full allowance.
Nationwide has long called for a reform of stamp duty and we believe increasing the nil rate threshold to £250,000, and linking it to inflation going forward, will stimulate the housing market and help reduce the burden that stamp duty places on first-time buyers in particular. The time is now right for reform, as the current low level of housing market transactions means such changes would have a lesser impact on tax revenues than at the height of the market."
