The boss of the UK’s biggest building society Nationwide has warned that a tax raid on Cash Isas will make mortgages more expensive.
Chief executive Debbie Crosbie said she was ‘very keen’ for the tax-free allowance to remain at £20,000 a year – as the lender reported a 30 per cent jump in profits.
It comes amid renewed fears that the Chancellor will cut the limit in her October Budget to get more savers to invest in stocks and shares instead.
Rachel Reeves is plotting an overhaul of the Isa regime but has not yet revealed what it will involve. She abandoned plans to address the issue in March’s Spring Statement after fierce pushback from savers.
Crosbie yesterday questioned whether a cut to the tax-free limit was the ‘right way’ to promote growth, as Nationwide revealed profits soared to £2.3billion in the year to March 31, from £1.8billion a year earlier.
The group has handed out a record £1billion in rewards to members. That includes a £100 bonus for 4m customers to be paid over the summer, which was first reported by The Mail on Sunday.
Warning: Nationwide boss Debbie Crosbie said she was ‘very keen’ for the duty-free allowance to remain at £20,000
It is the third ‘fairer share’ payment since 2023. And it is on top of a £50 payment that went to 12m members this year after Nationwide completed a £2.9billion takeover of Virgin Money.
Crosbie hailed an ‘outstanding’ year but warned that the economic outlook remained ‘highly uncertain’. It pencilled in modest growth in the wider UK economy of 1.4 per cent this year.
The Scottish executive yesterday said Cash Isas are a ‘very important source of funding’ for building societies providing home loans.
‘I’m not sure [a cut to the tax-free allowance] would prevent people from lending, but what it could do, particularly for some of the smaller building societies, is increase the costs of mortgage lending,’ she said.
Leeds Building Society boss Richard Fearon has said such a move means ‘mortgage rates would become more expensive to borrowers’. And the Building Societies Association has warned it could lead to a downturn in the housing market.
Crosbie said: ‘What [the Government wants] is to stimulate growth, and we’re aligned with that. I think the question is: is the right way to do that by reducing the Cash Isa limit?
‘We think that a lot of our customers really value the tax-free savings. We would be very supportive of the Government’s agenda on increasing growth and encouraging people to think about investing sensibly.
‘We are just not sure that the Cash Isa [reform] is the best way to achieve that. Keeping the Cash Isa limit where it is, is a good thing.’
She said it had been a ‘very busy start to the Isa season’ and that 40 per cent of customers were opening Isas in branches, in a vote of confidence for in-person banking.
Cash Isas are a ‘really important way of people saving and we think it’s very beneficial to a lot of people,’ Crosbie said.
‘[We are] very keen to maintain the cash level where it is.’
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .