Nationwide Building Society, the largest building society in Britain, has called for the government to double the limit of cash Individual Savings Accounts, or ISAs.
The lift would mean £10,680 could be saved in tax-free each each year instead of the current £5,340.
The building society claims that lifting the limits on what can be saved away from the taxman would help get Britain out of the current savings drought.
Experts say that the nation faces a crisis, especially as the current workforce ages and enters retirement, as Britons are not saving enough.
The doubled limit would put cash ISAs in line with the investment limit for ISAs and reward savers at a time when interest rates are punishingly low, advocates say.
Encouraging savings is even more important in light of a new report from ING Direct, which shows that the average middle class family is dipping into their savings for an average of £2,000 over the last 3 months.
This figure is for the ‘typical’ middle class family, earning £47,000 per year, well over the national average.
The problem with having £2,000 less in cash savings is that the current economic climate makes job security very rare, with many fearing that they will be made redundant or have their hours cut. British households must learn to save, particularly when times are secure, experts say.
Raising the cash ISA limit to £10,680 would help one sector in particular that is in dire need of a boost: the housing market.
Experts say that the new risk-shy approach of lenders towards those looking to take out a mortgage has made it nearly impossible for anyone to buy property without a large amount in up front cash.
Since this eliminates the possibility for large swathes of the population to even consider getting on the property ladder, the housing market is suffering from lack of interest and lack of possible buyers.
However, if savers were given a break such as a higher limit on how much they can save tax-free, there would be more incentive for those looking to buy a house to save towards their deposits.
Even for those not looking to take out a mortgage, the simple act of boosting tax-free allowance could be a huge help for savers and families who are being particularly battered by the current economic climate.
Because of the Bank of England’s low base rate of 0.5%, savers are hit with similarly suppressed interest rates.
This is made worse by the over 5% inflation rate that has hit the country over the last year, making each household purchase more expensive for families who are already under tighter budgets than ever.