ISA Limits

Isa limit increase is "good news" for savers

Savers have received a welcome boost with the rise in limits for cash individual savings accounts (Isas) announced in yesterday's Budget.



However, industry insiders claim that more needs to be done to improve conditions for saving in the UK.

The director-general of the Association of British Insurers, Stephen Haddrill, said the Budget is "a start towards revitalising saving in the UK".

However, he added that the measures suggested are "meagre" when considering the scale of the savings gap problem in the UK.

Mr Haddrill claimed the rise in Isa limits falls short of inflation since the initial introduction of the savings scheme.

He expressed the hope that the government will continue to raise Isa limits in the future, saying: "We need to move further and faster."

The director-general of the Building Societies Association (BSA), Adrian Coles, also welcomed the cash Isa limit increase to £3,600 as "good news for savers".

He added that the BSA hopes for frequent reviews of this limit in the future in order to "prevent erosion by inflation".

Delaying saving costing typical consumer £243

Consumers have been reminded that they can use their tax-free individual savings account (Isa) allowance any time during the year and that they could be wasting money if they wait until just before the deadline.

Abbey Savings said that Britons could be losing almost £3 billion in interest by delaying using their yearly Isa allowance until April 2008.

A saver who was depositing the maximum allowance of £3,000 from April 6th 2007 to April 5th 2008 into a mini cash Isa until the last minute could be losing out on £243 of interest, the firm has calculated.

With 12 million cash Isa savers in the UK, this would add up to £2,916 million.

Reza Attar Zadeh, head of savings at Abbey, said that mini cash Isa rates were better than they had ever been, but that people often left saving in them to the end of the tax year.

He added: "However, people that leave saving in an Isa to the last minute face losing a significant amount of interest throughout the year. Additionally, the competitive deals that are currently available may not be available next year."

Gordon Brown announced in last month's Budget that the maximum allowance for cash Isas is to be increased to £3,600 from April 2008.

Insurances Limited comments ‘ISA’s or otherwise known as Individual Savings Accounts have been popular in recent years but have been over shadowed by property investment. As reported by Landlord Mortgages it seems that the UK consumer continues to invest in Bricks and Mortar via a Buy To Let Mortgage. ISA plans will remain popular as long as the current tax breaks remain in place.’

© See Terms and Conditions