Savers should be allowed to carry over any portion of their Isa allowance that they do not manage to use up in any one year, a think-tank has argued.
Policy Exchange said that instead of losing any Isa allowance that goes unused in any particular year, people should instead have the power to transfer any of their annual allowance that they do not manage to use into a “bonus Isa” or Bisa - which they can then top up at a later date.
There could be a cap, initially set at £10,000, on the total amount that savers could roll over into their Bisa, which would act as a “flexible add-on” to their main annual allowance the think-tank suggested.
The cap would help to control the cost of introducing the scheme.
Policy Exchange argued that the introduction of Bisas would reflect the fact that people’s incomes change throughout their lifetimes.
It would enable people who receive windfalls,to put more money away tax-free within a single year.
Alternatively consumers could top up the Bisa over a number of years until the cap is reached, Policy Exchange said. The Isa limit for the current tax year is £15,000.
Last year, the Government introduced new measures to make Isas more flexible.
Steve Hughes, head of economics and social policy at Policy Exchange said: “Britain, as a nation, is bad at saving.
“Policymakers should ensure that there are as many opportunities for people to keep the interest earned on the money they put away.
“Many people, for example, benefit from a one-off large financial windfall such as the sale of a house at least once in their lifetime. This is not currently recognised in the design of the savings system. The introduction of a bonus Isa allows people of all ages to take advantage of unused tax free savings at a point later in their lifetime.”
A Treasury spokeswoman said: “We want to support savers at all stages of their life.”