Isa limits grow but not enough
March 22, 2007 by admin
Filed under News, News-Banking
People who are looking to invest money in a cash Independent Savings Account (Isa) have been given a welcome boost in Gordon Brown’s 11th Budget.
The Chancellor of the Exchequer announced that investors can now save an additional £600 in an Isa and will be free from paying tax on that money.
When cash Isas were first introduced in 1999 the maximum tax-free savings amount was £3,000. This figure has never changed until now.
Despite the increase being well received by many, Mr Brown has been criticised for only raising the total Isa limit by £200 to £7,200.
Critics argue that while the £3,600 limit is in line with inflation, the £7,200 limit falls well short.
“While the increase in the cash Isa allowance is a welcome move, we believe more should be done to encourage long-term savings,” commented Mike Regnier, head of savings at Halifax.
“If the total ISA allowance had risen in line with inflation, savers would now be able to invest around £8,500 per year, free of tax.”
The increase on total Isa limits has been labelled “meagre” by the Association of British Insurers, which called for the government to continue increasing limits in the years to come.
Gordon Brown’s new Isa limits will come into effect from April 2008.
