Lower age limit for tax-free investors

Savings

Further tax breaks for savers were announced. The current annual limit on individual savings accounts (ISAs) will be maintained (it was expected to be reduced next year), while the age limit for those qualified to take out the tax-free investments will be lowered.

Further tax breaks for savers were announced. The current annual limit on individual savings accounts (ISAs) will be maintained (it was expected to be reduced next year), while the age limit for those qualified to take out the tax-free investments will be lowered.

Mr Brown said the maximum amount of investment in ISAs will be kept at £7,000 a year for the next five years, starting in April. The move will come as a relief to ISA providers and savers, as Mr Brown had threatened to reduce the ISA limit to £5,000 a year.

ISAs will also be opened up for the first time to those aged 16 or 17, who will be able to invest in a cash ISA, which is capped at £3,000 a year.

Melanie Johnson, the Economic Secretary to the Treasury, said: "Allowing 16 and 17-year-olds to open a cash ISA extends the opportunity for tax-free saving to 100,000 under-18s who work and pay tax."

The Government introduced ISAs, which can be invested in a mixture of cash and shares, in 1999 as part of its drive to encourage individuals to accumulate private savings.

Simpler rules governing existing Personal Equity Plans (PEPs), the tax-exempt savings ISAs replaced, were also outlined. PEP holders will now be able to invest their funds in equities listed outside the European Union, a measure open to ISA investors.

The Treasury also launched a plan to change the rules governing the sale of financial products in an attempt to widen consumer choice.

Under the proposals, any company will be able to sell a stakeholder pension or kite-marked ISA provided by any other company. This marks a change from the current rules, which allow companies to sell only their own products.