Calls on the chancellor to tackle ISA limits, simplify children's savings and raise stamp duty thresholds

In a letter to the Chancellor ahead of next Wednesday's Pre-Budget Report, the UK's biggest building society points out the current ISA limits have not been increased at all in the seven years since they were introduced.

This means, at current prices, the £7,000 limit that a saver can invest in a maxi-ISA is now worth an equivalent investment of just £5,770 in real terms, and the £3,000 cash-ISA ceiling just £2,473.

While Nationwide welcomes recent Government proposals to simplify the ISA regime and extend the initiative indefinitely beyond its original 2010 commitment, it also believes that increasing the limits to £9,000 would be a fair response to savers' interests and help encourage a more robust savings culture in the UK.

In his letter to Mr Brown, Nationwide's executive director, Stuart Bernau, said: "One in three people benefit from the tax-efficient incentives of ISAs and for many of Nationwide's customers a cash ISA is their main savings account.

"ISAs have been a savings success story, and we are delighted that the current ISA is to become a permanent feature of the UK savings market.

"However, the tax breaks for saving simply aren't worth what they were seven years ago and Nationwide believes that it is time to redress the balance and restore the limits to their true value, thereby achieving their full potential."

Nationwide also wants to see the Government introduce fairer rules on tax-efficient savings and investments for children after the Society estimated that, although children can open a cash ISA at 16, as many as 10 million youngsters in the UK aged under 18 are too old to qualify for a Child Trust Fund (CTF), but too young to invest in an ISA, and therefore denied the opportunity to save tax efficiently.

This means that parents who want to save for a child who is too old to qualify for a CTF would find that as the cash sum grew, they would become liable for tax on interest earned above their personal allowance on the investment, which could be costing savers as much as £60 million a year.

Nationwide believes this two-tier system, which can see siblings treated differently in tax terms, is unfair and wants the Chancellor to equalise the rules to give all children the same incentives to save for the future without being penalised.

In addition, as part of its commitment to support affordable housing in the UK and make it easier for first-time buyers to get a foot on the housing ladder, Nationwide is also asking Gordon Brown to take the long-overdue action of increasing the threshold, at which the initial 1 per cent tier of stamp duty tax paid on residential house purchases kicks in, in line with house price inflation.

This would take the threshold up to £202,000 from its current level of £125,000, based on the original threshold of £60,000 increasing in line with house prices since 1993. With figures from the Council of Mortgage Lenders showing that 56 per cent of first-time buyers now pay stamp duty, compared to just 48 per cent a year ago, this move would free up thousands of homebuyers each year from the burden of the tax.

Stuart Bernau told the Chancellor: "As property prices continue to rise, an increasing number of people are buying houses and being caught by stamp duty.

"Whilst we welcome the Government's move to raise the stamp duty threshold in the last Budget, Nationwide believes that stamp duty limits should be linked to house price inflation to ensure the burden of stamp duty keeps pace with rising house prices.

"If this were the case, the 1 per cent rate should now start at £202,000."