Will the Chancellor's 'golden egg' turn out to be rotten?
ISA limits are to rise - but, as an attempt to change our approach to saving and investment, it is at best a half measure.
Has Alistair Darling thrown savers a much-needed lifeline? The latest budget included an announcement that individual savings account (ISA) limits are heading up only the second time that the amount you can save has risen since their introduction ten years ago. But this time you'll have to wait a while to see any benefit.
Indeed, most of us will be waiting a year to take advantage of the change. The new total annual investment limit will rise from £7,200 to £10,200, but only from 6 April 2010. That is, unless you are over 50 in which case you can use the extra allowance from 6 October 2009.
Supposedly that six-month delay will help ISAproviders get their systems in order, but for savers "to have an additional limit halfway through the year for certain people is about the last thing we needed", says Martin Lewis on Moneysavingexpert.com. "With savers suffering right now, a simple announcement to put the limits up with immediate effect for everyone would have done a lot more good." Even for the over 50s "the raised ISA limits will not create any overnight millionaires", says Carolyn Steppler of KPMG. "An extra £1,500 allowance from 6 October [the cash ISA limit rises from £3,600 to £5,100] on a cash ISA paying 3% will give extra income of £22.50 over the rest of the tax year, meaning a tax saving of just £9 for a 40% taxpayer."
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Not equalising the overall split between the maximum amount you can deposit in savings (£5,100) and the sum you can invest in shares (£10,200) is also disappointing, given "the Chancellor's promise to help the plight of those who rely on their savings to survive", says Alan O'Sullivan on Thisismoney.co.uk.
Overall, as an attempt to change how the public approaches saving and investment, this is at best "a half measure," says Darius McDermott, head of Chelsea Financial Services.
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