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ISA changes to cost Government millions

ISA changes to cost Government millions

Category: Savings

Updated: 05/06/2017
First Published: 05/10/2009

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 It is now over 6 months old so the content may be out of date.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 Government has estimated it will give away an additional £85 million over the next few years as a result of the higher limits it has introduced for ISAs.

These new limits, as introduced by Alastair Darling in his April Budget, will see a £3,000 increase in annual ISA allowance.

Savers born before 6 April 1960 will be able to top up this year's allowance from tomorrow, while everybody else will have to wait until the beginning of the next financial year in April 2010.

Almost all banks and building societies have said they will allow top-ups, although some only for a limited period of time. However, savers are advised to check specific details with their provider.

According to Government estimates, it is to forgoe £2 billion from ISAs, as it normally collects tax from investments and savings.

"Two billion is a lot of money and it shows just how much money people who use ISAs are already saving. It's great to think that all that money is going back into the investor's pocket, rather than the taxman's," commented Paul Kennedy, director of tax wrapper and trust planning at Fidelity International.

"It's really important to understand that an ISA is not about taking more risk with your money and it's not about taking less risk. It's simply about understanding that wherever you chose to save or invest, the taxman normally takes part of your investment return.

"With an ISA he does not and you'll get more back. If you have savings or investments and don't use an ISA, you're going to miss out on your share of this great giveaway."

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