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Isa allowance rising to £10,200 | Isa allowance rising to £10,200 |
(1 day later) | |
Savers over 50 will have the chance to top up tax-free savings in Individual Savings Accounts (Isas) from October. | Savers over 50 will have the chance to top up tax-free savings in Individual Savings Accounts (Isas) from October. |
The annual limit will go up from £7,200 to £10,200 from 6 October for those over 50 years old and for everyone else from April 2010. | |
The cash limit in the overall allowance will rise from £3,600 to £5,100. The remainder can be invested in shares. | The cash limit in the overall allowance will rise from £3,600 to £5,100. The remainder can be invested in shares. |
There are about 18 million Isa account holders in the UK, with five million using the full allowance each year. | There are about 18 million Isa account holders in the UK, with five million using the full allowance each year. |
Changing times | Changing times |
This is not a case of tinkering around the edges Christine Ross, Savings and investments expert What the Budget means for you Try the Budget calculator | This is not a case of tinkering around the edges Christine Ross, Savings and investments expert What the Budget means for you Try the Budget calculator |
Isas were introduced 10 years ago by then-chancellor Gordon Brown in an attempt to encourage UK residents to get into the savings habit. | Isas were introduced 10 years ago by then-chancellor Gordon Brown in an attempt to encourage UK residents to get into the savings habit. |
Some BBC website readers have already been asking about the changes and how it would affect them. | Some BBC website readers have already been asking about the changes and how it would affect them. |
The current limit is £7,200, with a maximum cash investment of £3,600. This will go up to £10,200, with half of this as a cash investment - costing the Treasury a total of £60m by 2011-12. | The current limit is £7,200, with a maximum cash investment of £3,600. This will go up to £10,200, with half of this as a cash investment - costing the Treasury a total of £60m by 2011-12. |
The move has been welcomed by savings and investments expert Christine Ross who told the BBC that this was a bold move. | The move has been welcomed by savings and investments expert Christine Ross who told the BBC that this was a bold move. |
"This is not a case of tinkering around the edges. For a lot of people a great deal of their savings will now fall outside of the tax net," she said. | "This is not a case of tinkering around the edges. For a lot of people a great deal of their savings will now fall outside of the tax net," she said. |
But the benefit to savers will be relatively limited if interest rates fail to rise from their current low levels, according to David Black of Defaqto. | But the benefit to savers will be relatively limited if interest rates fail to rise from their current low levels, according to David Black of Defaqto. |
BUDGET 2009 Complete Budget report [2.59MB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader here | BUDGET 2009 Complete Budget report [2.59MB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader here |
At the best interest rates being offered at present, the increase gives additional tax-free interest of £54.15, he said. | At the best interest rates being offered at present, the increase gives additional tax-free interest of £54.15, he said. |
Brian Morris, head of savings at the Building Societies Association (BSA), said there was some breathing space for the providers of Isas to administer the changes. | Brian Morris, head of savings at the Building Societies Association (BSA), said there was some breathing space for the providers of Isas to administer the changes. |
"We will be checking with our members that six months is sufficient," he said. | "We will be checking with our members that six months is sufficient," he said. |
"The increase in the limit is very welcome and something that we lobbied for. However, we would have preferred for this all come into force in one go." | "The increase in the limit is very welcome and something that we lobbied for. However, we would have preferred for this all come into force in one go." |
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