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Savers unclear on new ISA limits

Savers unclear on new ISA limits

Category: Savings

Updated: 22/02/2010
First Published: 22/02/2010

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 It is now over 6 months old so the content may be out of date.

Some savers run the risk of missing out on tax-free returns because of confusion over the increase in the Individual Savings Account (ISA) limits, new research has revealed.

The new ISA contribution limits will be fully rolled out in April, allowing savers to put away up to £10,200 per year tax-free, up to £5,100 of which can be invested into a cash ISA.

However, new research from National Savings & Investments (NS&I) found that a quarter of people were unaware that the ISA allowance would increase in the new financial year.

An additional 24% said they were aware that new limits were due to come into force, but admitted they were unsure what they will be.

Meanwhile, another 10% believed the new ISA limits would be higher for those aged 50 and over only, apparently unaware that the new allowance is to become universal.

Only 15% of those surveyed said that they fully understood the changes. "The fact that all interest earned in an ISA remains tax-free means it's a must-have product for people looking to maximise their hard earned savings," said John Prout, NS&I sales director.

"Understanding the allowances and reviewing the terms of the product is vital for savers. With less than two months to go until the end of the tax year, there is no time like the present for everyone to check their finances and plan to benefit from tax-free savings."

The government-backed provider has put together three top tips to help savers make the right ISA choices:
  • Review your options. Getting the best deal is seen as the most important consideration for all people aware of ISAs, with 72% saying the rate of return is important to them.
  • Read the fine print. Only 58% of people look at all the conditions of a cash or equity ISA before investing. Therefore, make sure you take into account all the details that a financial provider is offering. These include notice periods, charges and penalties.
  • Don't be afraid to ask. Many people are not confident about buying financial products because they do not understand the jargon.

Find the best savings accounts 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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