Business News - February
Increased ISA allowances
Anyone aged 50 or over before next April will be allowed to save up to £10,200 in a tax-free ISA account
The equity ISA limit has been raised by £3,000 from £7,200 to £10,200. Of this, allowance, the cash ISA allowance has been raised by £1,500 per tax year from the previous £3,600 limit to £5,100. Remember, for every £1 you put in a cash Isa, you lose £1 in your stocks and shares allowance.
You can hold up to two ISA’s each year. One cash ISA and one equity ISA, which is used as a tax free wrapper for stocks and shares and fund investments. Under the new rules and from the dates stated above, you can put up to £10,200 into an equity Isa, minus the amount you have put in a cash Isa. The most you can put in a cash Isa is £5,100.
At present the new allowances are only available to the eligible age group. However, in April 2010 this new limit will apply to all savers.
A cash ISA is a normal savings account where the interest is not taxed and a stocks and shares ISA allows access to the equity markets with the majority of the returns also tax-free.
Does this apply to all providers?
Financial website Moneyfacts.co.uk says virtually all of the major cash Isa providers will allow top-ups to the new £5,100 limit. However, not every bank or building society will allow you to top up an existing fixed rate ISA to the new limit and you should check with your chosen savings institution. Some providers have been given special authority to open a second ISA for the new amounts, rather than topping up existing holdings.
