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Inflation linked ISA increases unveiled in Budget

Inflation linked ISA increases unveiled in Budget

Category: Savings

Updated: 24/03/2010
First Published: 24/03/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Savers have been given some much needed support, after the Chancellor revealed in today's Budget that the ISA allowance is to increase each year.

Alistair Darling confirmed the maximum amount that an individual will be allowed to save in the tax-free savings vehicle will rise annually in line with the rate of inflation.

The current limits are already set to rise for all savers to £10,200 from 6 April this year, up to £5,100 of which can be saved in a cash ISA.

However, if the rate of inflation averages out at the Government's 2% target during the next year, the ISA limit could rise above £10,400 for the 2011/12 tax year.

If the target continues to be met for the foreseeable future, the limit will be more than £1,000 higher, at over £11,200, within five years.

Amongst the other announcements made in the Budget, basic bank accounts are to be made available to everyone in the UK, a move set to benefit more than one million people over the next five years.

The already planned 3p increase in fuel duty is to be phased in between April this year and January 2011 to help drivers already struggling with rising petrol prices.

Tax on beer, wine and spirits is to rise by 2%, with cider drinkers the unlucky ones in being hit with a 10% hike.

Smokers are also set to pay more, with tobacco duty increasing by 1% with immediate effect, and then 2% in subsequent years.

No further changes to VAT or income tax are in the pipeline, while the inheritance tax threshold is to be frozen at its current level of £325K for the next four years.

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