Hikes in ISA limits result from budget

It was announced at the recent budget by Alistair Darling, the Chancellor, that ISA limits in the UK were being hikes, although savers will not see the benefits straight away.

However, some savers who have seen their savings interest plummet over recent months will be pleased to hear that they now have more leeway with their ISA accounts, according to industry experts. The limits on ISAs have been increased from £7,200 to £10,200, giving savers grace on an additional £3000.

There are some downsides, however. For this year the new increased limits will only be available for those aged over fifty, and the changes will not be made until October, as financial institutions have to make changes to their systems to adopt the new regulations. For other savers the benefits will not begin until next year, so for now savers will have to continue suffering the abysmal returns on savings.

An official from the Nationwide Building Society said that more needed to be done, and that limits should be further increased and savers should be allowed to defer unused allowances.

He stated: ‘Linking the Isa subscription limit to inflation would provide an added incentive for consumers to save, while increasing the flexibility of Isas would offer greater support to those consumers who need to dip into their savings or those who are currently struggling to save their full allowance.’

Another official said that cash ISAs should receive priority over share ISAs, stating: ‘The increase of the ISA allowance to £10,200 will offer savers a smidgen of better news although I’m sure that many will have welcomed a more flexible option where they could have invested the full £10,200 in cash. The stock market is a far from ideal savings home for the elderly who seek absolute security of their capital. The recent volatility of the markets will ensure that many will continue to give equities a wide berth.’

Tags: society, cash isas, isa limit, ISA, investment