New ISA limits ‘all sizzle and no sausage’

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Government plans to help elderly savers by increasing the limit on tax-free savings will have little effect, a financial expert has warned.

Kevin Mountford, savings expert at Moneysupermarket.com, said the increased limit on cash ISAs – from £3,600 to £5,100 – is worth a paltry £1.89 in tax savings on interest payments.

The £1,500 increase – which applies to savers over-50 from October – is worth so little because interest rates on savings accounts are at an historic low.

Even if savers manage to find a higher interest ISA account for their extra £1,500, they will only boost their income by £5.25 in six months.

“It’s all sizzle and no sausage,” Mountford said.

“The change does very little to help savers.”

He added that Alistair Darling’s budget “will only scratch the surface of a deep rooted problem”.

Research by Moneysupermarket.com found that 61% of savers think raising the limit on ISA savings was only a step in the right direction, and that more needs to be done.

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