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5th
Nov 2013
/

2014 ISA Limit To Be Increased

Following the publication of this year's inflation data, it is likely that the annual ISA allowance will rise to £11,760 from next April - a figure that should be confirmed at the autumn statement on 4th December*.

As has been the case in previous years, savers can use their £11,760 ISA allowance in stocks and shares ISAs alone, or they can put up to £5,880 of this allowance into a cash ISA, and the remainder into a stocks and shares ISA.

ISA rates linked to inflation

The ISA allowance has seen regular rises for many years, but it is only since the 2011/12 tax year that it has been linked to the rate of inflation. The increase in the ISA allowance is calculated by adding the September rise in the rate of inflation as calculated by the consumer price index to the previous year's ISA allowance. It is then rounded up to rounding nearest figure divisible by £120 in order to allow easier monthly contributions**.

Could ISA holdings be capped at £100,000?

While the news of the increased ISA limit for 2014/15 will be welcomed by savers and investors alike, there is speculation that the Treasury may decide to place a limit on the amount that can be held in an ISA in the future. Currently, each eligible individual has an annual ISA allowance, but they are permitted to transfer in their ISA balance form previous years, allowing for a substantial accumulation of tax-efficient savings over time. The speculated cap of £100,000 on the total amount which can be held in an ISA would be a blow for many savers who have accumulated a sizable ISA nest egg over the years.

Compare cash ISA deals and investment ISA deals here.

No news, feature or comment should be seen as a personal recommendation to invest. If you are in any doubt as to the suitability of a particular investment you should seek independent financial advice. Tax treatment depends on individual circumstances and may be subject to change in the future.

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