Promised rise in ISA limit is set to be £470

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The amount of money people can save into a tax-free ISA looks set to rise by £470 next year, it emerged yesterday. The Government announced in the Budget that it would increase the ISA allowance each year by the equivalent of the retail price index in September.

The Treasury is due to make a formal announcement on the new ISA allowance in the next couple of weeks, but figures released yesterday showed that RPI was 4.6 per cent in September. If an increase of this level was applied to ISAs, the annual tax-free savings allowance would rise from £10,200 to around £10,670 in April next year – an increase of £470.

Within the total, the amount people can save into a cash ISA is likely to rise from £5,100 to £5,335.

Savers can put all their annual allowance into an equity ISA, or they can split it between a cash account and an equity one, paying in a maximum of £5,100 into a cash ISA during the current tax year.

Around 18 million people in the UK have an ISA, with 14.9 million people paying money into one of the accounts during the year to 5 April.