By ADRIAN LOWCOCK 14/10/2010
In the March 2010 Budget, the previous Government linked the total ISA allowances to the Retail Price Index (RPI).
This means that next year’s ISA allowance could be as high as £10,680. Historically, the HMRC has used September’s RPI figure to calculate next year’s limits. RPI for September was 4.6%, which would increase the amount to by £470, with the additional £10 increase coming from a rounding up to the nearest £120 to make it easier for monthly direct debits to be adjusted.
Following announcements yesterday regarding pensions, this is good news as official statistics have shown increases in ISA limits has led to people saving more.
Up to half of the ISA allowance (£5,100) can go into a cash ISA and the balance of the unused allowance, up to £10,200, can go into an investment ISA. These rules will remain and if the new allowances are confirmed, investors will be able to put up to £5,340 into a cash ISA.
Any new limit will come into effect in April 2011 and will need to be confirmed by the HMRC.
In the meantime if you would like to discuss the likely implication of these changes in more detail or if you have any questions at all please call us on 020 7189 9999.