June Budget – Individual Savings Accounts (ISAs)
The Chancellor has announced that the ISA limits will be increased in line with the Retail Price Index (RPI) annually from 6 April 2011. There was already a significant increase in the limits introduced from 6 April 2010 to £10,200. A maximum of half the ISA limit, currently £5,100 can be invested in cash.
The new limits will be rounded to the nearest multiple of 120 to allow savers who make monthly savings to calculate their monthly payments more easily. HMRC will announce the new limits prior to the start of the new tax year.
ISA accounts are free of all income tax and capital gains tax on the interest that arises and the increases in value that flow. Eligible holdings are cash (up to half the maximum), national savings products, life insurance products, stocks and shares. Account holders may make withdrawals at any time without the loss of tax relief.