Savers will be able to continue using their £7,000 annual individual savings account (ISA) allowance until at least 2010.
Gordon Brown said he would extend the tax-free savings scheme, which had been due to end next year, for a further four years. The Chancellor also confirmed his pre-Budget statement announcement that he would scrap plans to reduce the tax-free ISA limit to £5,000 a year.
The extension of ISAs was warmly welcomed amid widespread concern that most Britons are not saving enough for the future. Paul Feeney, head of retail at Gartmore Investment Management, said: "It is great that Mr Brown has recognised more needs to be done to encourage people to save and invest, more now than ever, for their future."
Cash ISA providers said that the Chancellor's U-turn on limits was particularly important. As part of his plan to reduce the overall ISA allowance, Mr Brown had intended to cut the limit on cash ISAs to just £1,000 a year. Cheryl Millington, the head of savings at Halifax, said: "Some 8.8 million cash ISAs were opened in the last financial year so this will benefit a substantial number of people."
Stocks and shares ISAs, which have in recent years proved less popular than cash accounts, also received a boost. Mr Brown said savers would be able to hold a wider range of assets, including funds that invest in property.Reuse content