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 A?3,600 to A?5,100 – is worth a paltry A?1.89 in tax savings on interest payments.

The A?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 A?1,500, they will only boost their income by A?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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