Nationwide, the UK's largest building society, has issued a caution against government proposals to cut tax breaks on cash Individual Savings Accounts (Isas). The move comes as City firms lobby to reduce or eliminate these benefits, affecting nearly 8 million savers annually. The debate centers around two main types of Isas: cash Isas and stocks and shares Isas, introduced in 1999. Nationwide, a prominent mortgage lender, recently reported "record" growth in home loans and deposits, underscoring the importance of cash Isas.
Cash Isas play a crucial role as a funding source for banks, building societies, credit unions, and other financial entities. The funds collected through cash Isas enable these institutions to provide loans to households and businesses. Nationwide's unique policy allows first-time buyers to borrow up to six times their income for a mortgage, a first for any major high street lender.
The Building Societies Association (BSA) has also voiced opposition to the proposed changes. Robin Fieth, BSA's chief executive, labeled the potential removal of cash Isas as a "retrograde step," emphasizing their significance in the financial ecosystem. He stated:
"I am writing to put on record how strongly we disagree with the recently reported calls from City firms to restrict cash Isas" – Robin Fieth, BSA chief executive
Concerns are shared across the industry. Chris Irwin, director of savings at Yorkshire building society, warned that removing cash Isas could lead to reduced mortgage availability and impact the financial wellbeing of many individuals:
"have detrimental impacts on the financial wellbeing of many, along with increasing their tax liability" – Chris Irwin, director of savings at Yorkshire building society
Andy Moody, chief commercial officer at Leeds building society, echoed these concerns, highlighting potential negative effects on mortgage lending:
"a significant detrimental impact on mortgage lending, including the thousands of first-time buyers we support every year, if the cash Isa rules were undermined" – Andy Moody, chief commercial officer at Leeds building society
Nationwide's director of retail products, Tom Riley, emphasized the dual benefits of cash Isas:
"Cash Isas not only help ordinary people save efficiently but enable us to fund our first-time buyer lending" – Tom Riley, director of retail products at Nationwide building society
While some industry leaders like Andy Briggs, chief executive of Phoenix Group, call for thoughtful consideration of tax policies to support long-term growth:
"While we do not support the total removal of cash Isas, we do urge the government to consider how tax policy can better support long-term growth for individuals and the wider economy" – Andy Briggs, chief executive of Phoenix Group