The over 50s have been enjoying an enhanced ISA allowance since October, but when does the tax free savings limit go up for everyone else?
Since the pre-budget report in October, 2009, anyone aged 50 or over has benefitted from a tax free ISA allowance that's £3,000 more than everyone else.
However, from 6th April, 2010 (the start of the new tax year) every UK resident over the age of 16 and under the age of 50 will see their annual tax-free ISA allowance rise from £7,200 to £10,200 too.
Once the increase takes effect you will be able to save up to:
- £5,100 in a Cash ISA each tax year.
- Up to £10,200 in an Investment ISA each tax year (less any amount you've invested in a Cash ISA during the same tax year).
Remember that you can transfer money saved in a Cash ISA to an Investment ISA, but not the other way around.
ISAs were introduced over ten years ago by the then Chancellor, Gordon Brown, in the hope that the offer of tax-free savings would encourage more people to save. This turned out to be very popular initiative and it is estimated that over 18 million of us in the UK now hold an ISA.
Cynics might argue that the benefits of the latest rise in the ISA allowance will be negligible as savings rates remain stunted. However, there are still some very competitive rates out there to be had. All you need to do is shop around for the best deal.
