It is the older generation that appears to have the most reasons to be cheerful, after Alistair Darling delivered a Budget targeted at supporting those lower income pensioners likely to have seen their earnings from savings fall as a result of recent drop in interest rates. One new measure particularly worthy of praise from those who rely on ISAs for tax free income should be the raising of the ISA contribution limits. Not only are those over 50 the first to be able to take advantage of the new limits (from 6 October this year), the first £10,000 of savings held by pensioners will not be taken into account for assessment of their entitlement to Pensions Credit, Housing Benefit and Council Tax Benefit either. In addition, Pension Credit recipients who may have overpaid tax on their savings income in the past six years are set to be contacted as part of a taxback campaign. It is hoped the campaign will encourage people to claim tax back on savings income and, where possible, register to avoid overpaying tax in future. Those who claim are expected to receive around £200 on average. Also announced was that from the 2009/10 tax year, there will be an additional payment alongside the Winter Fuel Payment worth £100 for households with someone aged 80 or over and £50 for households with someone aged 60 or over.
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