New ISA rules 2013

Chancellor George Osborne brought good news for ISA savers in the recent Autumn Statement, announcing that the overall amount consumers can plough into their ISAs will increase from a current figure of £11,280 to £11,520 in April 2013.

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ISA limits are calculated on the consumer prices index (CPI) measure of inflation in September, which stood at 2.2%, boosting the ISA limit by £240 for the 2013/14 financial year.

Junior ISA limits will also increase in April 2013, climbing from a current figure of £3,600 to £3,720.

However, there has been no change to the proportion of cash that can be held in an ISA and this will still be up to half of the total tax-free ISA amount (£5,760 in 2013/14).

The Chancellor also revealed that that the government will consult on expanding the list of investments that can be held within a stocks and shares ISA.

Savvy savers are expected to take advantage of their tax-free savings allowances ahead of the higher rate of tax threshold of £41,450 in 2013/14.

As an example, a higher-rate taxpayer with £5,000 in a savings account paying 3%, would have to hand over more than a third (£60) of the annual interest earned in tax. However, if this money had been saved in a cash ISA they would be keep the full £150.

The Centre for Policy Studies has recently championed a three-fold increase in the ISA limit to more than £30,000.

Outlining its suggestions for a reform of the annual contribution limits on ISAs and pensions, it argued that these should be combined to form a single cap of between £30,000 and £40,000.

The think tank argues that as well as increasing the scope of Isa saving this could save the Exchequer between £600 million and £1.8 billion a year, as the highest earners would receive less tax relief on large pension contributions.

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Posted by: WarrenWilson Categories: Finance Tags: , , Comments Off on New ISA rules 2013

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