Isa allowance increase in budget gives savers hope
There has been welcome news for savers in the budget today as savers over the age of 50 will be given the opportunity to increase their tax free savings in their Isas, as the limit is to increase from £7,200 to £10,200.
For those over 50, the change will happen from 6 October and for all other savers from April 2010.
Of the 18 million Isa account holders in the UK, only 5 million use the full allowance each year, however the increase is divided up with the cash allowance rising from £3,600 to £5,100 with the rest investable in shares.
James Davies an investment manager at Chartwell Group, and an independent financial adviser, said that Alistair Darling has finally addressed an important issue for savers given the fact that they were ignored in all previous budgets.
It is a timely change in direction helping both pensioners and savers at the time where both were being given a difficult time by the current economic climate.
Given the fact that interest rates offered are very low, the increase will result in an additional average tax-free interest of around £54.
Brian Morris, the head of savings at the Building Societies Association (BSA), said that the increase has been received well given the fact that the BSA had been lobbying hard for this. However there is some disappointment in the industry that the change wasn’t incorporated all at once.