ISA limits to increase by £600 GBP in 2012

The annual ISA allowance is to increase by £600 a year from April 2012.

Compare cash ISAs with Money Expert.

The new allowance will increase from £10,680 to £11,280 for the next tax year. The move comes after inflation rose to a shocking three year high of 5.2% in September.

Savers who have already seen their finances diminish, due to high inflation and the state of the UK economy, can look forward to a tax-free cash relief.

Starting from 6th April 2012 to 5th April 2013, savers will be able to put aside £5640 into a Cash ISA, or the full £11,280 in both Cash and Stocks & Shares ISAs.

Last year the ISA limit was linked to the inflation rate for the first time. From June the ISA limit was linked to the RPI. However, from next April it will change to the CPI, which could be seen as a silver lining against the recent inflation increase.

Chris McElligott, Head of Marketing at discount broker Willis Owen, said; “The increased ISA limit is one of the very few useful outcomes of high inflation. With ISA limits indexed to inflation, investors should grab the opportunity to invest more tax free while it exists. While it’s hard to predict, most forecasts suggest that inflation has now peaked, and will start to drop shortly.”

Low interest rates have proved difficult for savers and the impact of the economy has resulted in a very poor return for them. Taxpayers can use cash ISAs to negate the impact of taxation and make a small amount of interest on their savings too.

Best Cash ISA

Currently, the best cash ISA on the market is the Halifax 5 year fixed saver with an interest rate of 4.4%. However, this is currently 0.8% points below inflation and savers would have to sign up for five years to see the full benefit.
There is also a minimum investment of £500.

Compare cash ISAs with Money Expert.


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