Budget 2011 – Individual Savings Accounts (ISAs) indexation
The Chancellor has announced that the ISA limits are to be increased on an annual basis by reference to the consumer prices index (CPI) from the 2012-13 tax year instead of the retail prices index (RPI). If the CPI is negative the limit will be unchanged.
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.
An ISA account is free of all income tax and capital gains tax. 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.