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Fund firms call for investment limit to be inflation-linked

Fund managers have welcomed the Government’s decision to keep Isas but are calling for the annual investment limit to be inflation-linked.

Fidelity, Invesco Perpetual and F&C say the annual investment limit has decreased significantly in real terms since it was set at 7,000 in 1999.

According to Office of National Statistics figures, if the annual 7,000 limit had risen with inflation, it would now be 9,380.

Since Isas were launched in 1999, UK investors have opened 16 million accounts and invested 190bn.

Fidelity head of IFA channel Peter Hicks says: “Isas were set at 7,000 when introduced and remain at 7,000 today, which is lower than the Pep limit they replaced. We would just like some recognition that their net worth has decreased.”

F&C director of communications Jason Hollands says: “Other tax allowances are reviewed on an annual basis but the Isa has been stuck at its current level since its inception. This is considerably lower than the various general Pep, single-company Pep and Tessa allowances which were replaced by the Isa.”

Invesco Perpetual marketing director Rick White says: “A long-term commitment has now been established but we believe that more can be done and more incentives could be introduced to boost saving.

“The Isa subscription levels have not changed since its inception in 1999 and the Government should look to upgrade this in line with inflation in the forthcoming Isa review.”

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