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New tax year, new ISA limits

New tax year, new ISA limits

Category: Savings

Updated: 04/04/2011
First Published: 06/04/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The new tax year begins today, meaning the enlarged ISA limits are now applicable to everybody.

Since last October, the ISA sector has been something of an uneven playing field.

Savers aged 50 and over have been able to invest £10,200 into an ISA, £5,100 of which could be placed in a cash ISA.

However, savers aged under 50 who rushed to invest their 2009/10 allowance last week had to adhere to the previous limits of £7,200 overall, with a maximum of £3,600 allowed in a cash ISA.

The playing field has now been levelled for everyone at the higher contribution levels.

Various studies and surveys have showed that a marked percentage of savers are keen to take advantage of the new limits.

The changes to the ISA limits are just the second such increase since the accounts were introduced over a decade ago. As announced in the recent Budget, from next year, the ISA limits will rise in line with inflation.

ISAs have proved popular amongst Britons since they were launched, with the tax shelter element of the accounts meaning they offer a greater rate of return than savings accounts with equivalent rates.

They are the second most popular financial product in the UK, with only current accounts having a greater reach.

Research from Clydesdale Bank last week reported that a saver would have to find a standard account paying 3.75 per cent to match the return offered by a three per cent ISA.

Higher rate taxpayers would have to find a bond paying 6.25 per cent to match the return of a five per cent ISA.

Find the best savings account for you - Compare cash ISAs

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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