ISA limit could be raised to help savers, hints Brown

11 March 2009 / by Rachel Mason
People, like pensioners, who rely on savings and have seen their incomes drastically reduced thanks to interest rate cuts, could benefit from new rules surrounding ISA allowances.

On BBC Radio 4's You and Yours yesterday, the Prime Minister responded to a call from a retired woman who said that due to the fact she relied on her savings, her income had halved as a result of the base rate cuts. He suggested that there could be help for "people like you" in the Budget.

Pensioner Elizabeth from London said the Government had talked a lot about why it was important to bail out the banks but accused Gordon Brown of not addressing the plight of savers like her.

Mr Brown denied this and said that the issue would be addressed in the budget, suggesting that the ISA limit may be raised to help savers to get better returns on their investments.

"We are looking at how the individual savings account (ISA) can be made more attractive for the future, particularly for people like you," he told her.

"We are trying, obviously, to make sure in an era of low inflation that the incentives to save can remain high.

"These are the things that we're intent on doing. I think in the budget you will see some announcements," he said.

Currently, people can save up to £7,200 a year into an ISA (£3,600 of which may be saved in cash, the rest in stocks and shares) and not have to pay tax on the income received from the investment.

Although the Prime Minister did not go into any detail, his comments suggest that this current tax free allowance for ISAs could rise.

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