The Chancellor is coming under new pressure to raise the tax-free limits on individual savings accounts (Isas) following yesterday’s overhaul of the popular tax-free savings products.

Ed Balls, Economic Secretary to the Treasury, told a London conference on Wednesday the Government is now committed to making Isas a permanent fixture and intends simplifying them to encourage more savers to take them up.

Among the changes he announced was the removal of the mini/maxi distinction within Isas, but he did not offer any hope to those looking for a change to the annual limits, which have not been raised since Isas were introduced in 1999.

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At present savers can put £7,000 a year into a stocks and shares maxi-Isa, or £4,000 into a shares mini Isa or £3,000 into a cash-only mini-Isa. It is possible to have both types of mini-Isas, but it is not possible to buy a maxi-Isa and a mini-Isa in the same tax year.

The Building Societies Association said it looked forward to seeing the detail of changes but added it would be disappointed if it did not include an increase in the annual subscription limit for the cash-only mini Isa from the current £3,000.

The BSA has told the Treasury it wants the limit to be increased to £5,000. This view was backed by Nationwide, the country’s biggest building society.

Executive director Stuart Bernau said: ‘As a further boost for savers we would like to see the Chancellor announce in his pre-Budget report a rise in Isa investment limits, as they have remained unchanged since they were launched seven years ago.’

Richard Wastcoat, UK managing director of Fidelity International, the largest manager of Isas and Peps, which were replaced by Isas, said: ‘Now that the Government has confirmed its ongoing commitment to Isas, we would like to see this taken a step further with an increase in annual limits. The £7,000 Isa limit has never been increased, despite this being a lower amount than for the Peps they replaced.

‘If the Government is serious about its intention to foster a long-term savings mentality among the British public, they need to make it worthwhile for them to do so.’

Rachel Thrussell, head of savings at financial data company moneyfacts.co.uk suggested that Isa rates could be indexed-linked to maintain their value over time. She said: ‘While it is welcome news that Isas are here to stay, there is still perhaps more the Government needs to do, or could do to create the savings culture it desires.

‘We would like to see the maximum limit increased, particularly the cash component, which will be more widely used by the main audience the Government is aiming for. The limit will also become outdated over time. With the real value falling every year, perhaps the limit could be index linked.’

If the annual £7,000 maximum limit had risen with inflation, it would now stand at £9,380, said accountants and business advisers BDO Stoy Hayward. The £3,000 limit on cash Isas, which would be £1,020 a year higher if it had increased with the cost of living. Stephen Herring, tax partner at BDO Stoy Hayward, said: ‘Our calculations have showed that the limit on contributions needs to be raised, to ensure that savers continue to use ISAs, and we hope the Chancellor increases the limit in the pre-Budget report, perhaps to £10,000.’

More than 16m people have Isas and £190bn has been invested in them since their launch. Details of changes to the Isa regime are expected to be spelled out by Gordon Brown in his pre-Budget report later this month.

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