Tax advice of the week: Take advantage of new Isa rules

Anyone who will be 50 or over before 5 April next year should take note of new rules on Individual Savings Account (Isas). Under the 2009 Budget, Isa limits will be increased from £7,200 to £10,200 in the 2010/2011 tax year. But for those aged 50, the limit will increase as of 6 October 2009.

So what should you do if you already have an Isa for this year? You can't open a new Isa of the same type, but you can open a cash Isa if you only have a shares Isa, or a shares one if you only have a cash one.

You can also top up an existing account. So if you have invested your £7,200 allowance in a shares Isa for this year, you could add £3,000 to it, or take out a cash Isa for £3,000, or anything in between. (The shares Isa can hold the full £10,200, while the cash one has a maximum of £5,100.)

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Some providers may not let you top up, in which case you can transfer to another one. But check that penalties and lost interest do not outweigh potential gains, and note the existing Isa must be officially transferred, not simply closed.