ISA allowance increases for the over-50s

Millions of savers can now take advantage of higher tax-free savings limits.

On 6 October the investment limit for Individual Savings Accounts (ISAs) was raised to £10,200 for depositors aged 50 and over.

Announced in the 2009 Budget, the change means that up to £5,100 can be deposited in cash, while the remainder can be made up of stocks and shares.

The rise equates to a 50% increase in the total savings limit, which remains at £7,200 (£3,600 cash) for all other ISA investors. The new limit will apply to all ISA investors from 6 April 2010.

If your birthday falls between 6 October 2009 and 5 April 2010 you will be able to take advantage of the increased ISA limits on, or after, the day you turn 50.

The Government hopes the move will provide greater return for savers in the current economic climate.

According to a recent study by uSwitch.com, the new ISA limit could earn over 50s an extra £677 million in interest over the next 12 months.

Commenting, Rumina Hassam from uSwitch.com, said: ‘Chancellor Alistair Darling's decision to increase the ISA allowance for over 50s is a much needed boost for savers.

‘It will provide an added incentive to save more in a tax efficient vehicle, and will hopefully encourage those to use up their full allowance if possible.’

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