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‘Use it or lose it’, ISA savers told

‘Use it or lose it’, ISA savers told

Category: Savings

Updated: 25/09/2009
First Published: 24/09/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

With the introduction of the new ISA allowance for the over 50s fast approaching, savers have been told they should either use it or they will lose it.

From 6 October, anyone born on or before 5 April 1960 will see their overall ISA allowance increase to £10,200, with the cash ISA limit rising to £5,100.

The new rules will come into force for everyone else from the start of the 2010/11 tax year in April 2010.

While welcoming the initiative, Tony Vine-Lott, director general of TISA (Tax Incentivised Savings Association), told Moneyfacts.co.uk: "It is a 'use it or lose it option'. A large percentage of people do top out on their ISA limits and the new rules give extra capacity to save more should people be in a position to do so."

Meanwhile, after a recent survey from Saga suggested just five per cent of over 50s knew what the new limits will be, concern has been raised that not enough has been done to ensure people make the most of the benefits available.

However, with just over a week to go, Vine-Lott is confident that increased media coverage as the big day nears will soon see awareness improve.

"People do have until end of the tax year in April 2010 to make a decision about using the new allowance, so the fact that not everybody knows about it now is not disastrous," he added. "In addition, providers should be making existing customers aware of the changes, in particular those who have already hit or will be hitting the limit in the future."

One problem that it is feared might arise is if system limitations or product restrictions means providers are unable to offer existing customers top ups to make use of the extra allowance.

"The real problem is the restriction on having one ISA manager in a single tax year," explained Vine-Lott. "However, this would require a change of heart at the Treasury. We are speaking to the Government about waiving the restriction. If this goes ahead, it will make situation a lot easier."

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