ISA limit ‘expected’ to rise to £11,880
Posted by Jason Chapman in Government and taxation category on 23 Oct 13
With September’s Consumer Prices Index figures having been published, investors could expect a rise in the ISA limit to £11,880 from April 2014.
The formula for working out the ISA allowance involves taking the September Consumer Prices Index figure (2.7%) and applying it to the previous year's allowance, and then rounding it to the nearest figure divisible by £120 (to allow for monthly investing).
Applying that formula, rounding up, could mean that next year's ISA limit could rise to £11,880. The rise should be offically confirmed by Chancellor George Osborne in the Autumn Statement due to be held on 4th December.
For many years, the ISA limit was left fixed, with inflation eating away in real terms at the amount people could save. Historically, the ISA limit was £7,000 a year from 1999 to 2008 and then rose to £7,200 in 2008/09 and £10,200 in 2010/1, rising to £10,680 in 2011/12, £11,280 for 2012/13, £11,520 in 2013/14.
This increase comes on the back of rumours that Treasury officials have consulted financial services executives on plans to limit the amount that savers can hold in tax-free ISAs, as featured in a recent Sunday Telegraph
article. Several proposals have been looked at in reaction to what were described as concerns about the growing number of ‘ISA millionaires’.
For Willis Owen, the success of ISAs should be celebrated, with 15 million a year saving into them. But these rumours suggest nothing is sacred as the Treasury reviews savings policies.
We’d love to hear what you think of the possibility of the Treasury limiting your total pot of money you could hold in ISAs.