The limit on tax-free ISA savings accounts should be boosted, top accountancy firm PricewaterhouseCoopers has said.

According to employee John Whiting, tax partner at PwC, the expanded threshold would help to offset losses caused to savers by falling interest rates following recent cuts in the Bank Rate by the Bank of England. Last month the institution cut savings rates to 1.5%, the lowest rate since its foundation in 1694.

The reduction in the Bank Rate has been passed on to savings accounts including the ISA, meaning that in spite of its tax-free status, the account is unlikely to earn savers much money.

Commenting on the return drop of ISAs, Mr Whiting said: “It would undoubtedly help if you increase the ISA limit because if you look at it another way the value of the ISA and the tax exemptions has dropped simply because the sort of returns you are getting on your ISA have dropped.

“Looking at it one way it would make sense to raise the amount that you can invest so as to maintain the value of the whole proposition.”

Currently customers can open one cash Isa and one stocks and shares Isa each tax year. Up to £3,600 can be deposited in a cash ISA. A maximum of £7,200 can be invested in a stocks and shares ISA, minus however much you have invested in your cash ISA.

According to the Association of British Insurers, almost three quarters of Britons believe the benefits of savings accounts have dropped significantly during the economic downturn.

This entry was posted on Friday, January 30th, 2009 at 3:45 pm and is filed under Banking, Savings, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.