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Pressure grows to boost Isa allowance extension

Advisers have welcomed Chancellor Gordon Brown’s U-turn to extend Isa allowances but say he should keep the allowance indefinitely.

IFAs, product providers and trade bodies are united in their calls
for the Chancellor to do more than just stall planned Isa cuts.

In his pre-Budget report last week, Gordon Brown announced that he
would consult on extending the Isa allowance limit of 7,000 to
2009 instead of 2006.

F&C Asset Management head of communications Jason Hollands wants
to see the deadline extended again after this period in a bid to
increase savings. He says: “Ideally, we would like to see the Isa
allowance extended well beyond 7,000. In each year, other tax
allowances are upwardly reviewed whereas the Isa allowance has been
static since its inception. Isn’t it time for this to be raised?”The
Pep and Isa Managers’ Association says the consultation is a victory
after its campaign to get Isa limits extended. The Investment
Management Association wants a push to encourage further saving.

IMA chief executive Richard Saunders says: “We would further urge
the Government to commit to retaining the Isa beyond 2009 and to
ensuring that it contains significant incentives for saving.”

PSFM IFA director John Hamilton-Hunt says: “The Government claims to
be trying to tackle the problem of people’s reluctance to save for
the long term to fund their own retirement, but only guaranteeing the
tax benefits of Isas for another five years sends out the wrong
message. They should take the opportunity to introduce a long-term
initiative to save with a retirement Isa in which savers can put
aside 7,000 each year until retirement in a tax-advantage
vehicle.”

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