The new over 50s ISA limit which comes in tomorrow could bag them part of an £85million tax giveaway from the Government, which they should not miss out on, according to investment company Fidelity International.
From tomorrow, October 6, the over 50s ISA limit will be increased to £10,200, which means that the over 50s will be able to shelter an additional £3,000 from the taxman, equating to a total £85million over the next few years once the new allowance is introduced for everyone.
Those who will be aged 50 or over by April 6 next year will be able to start benefiting tomorrow from the latest savings initiative from the Government, but everyone else will have to wait until the new tax year begins to enjoy the new ISA allowance.
Those over 50s who have already paid in their maximum ISA allowance will be allowed to top it up, to a total of £10,200, half of which can be saved in a cash ISA, or the whole lot can be invested in a stocks and shares ISA.
The Government estimates that it already saves Brits £2billion by offering them tax breaks on their savings with the ISA wrapper, and says that the additional allowance will increase these savings by £85million within a few years.
Commenting on the imminent ISA allowance increase, Paul Kennedy, director of tax wrapper and trust planning at Fidelity International, says: "Normally, I tend to look at ISAs from the investor's perspective. That is, how much better off an investor would be by wrapping their investments or savings in an ISA, compared to not doing so.
"However, it's no bad idea to look at the bigger picture. £2billion is a lot of money and it shows you just how much money people who use ISAs are already saving. It's great to think that all that money is going back into the investor's pocket rather than the taxman's," he said.
Explaining how ISAs work, and dispelling common misconceptions about them, Mr Kennedy added:
"It's really important to understand that doing an ISA is not about taking more risk with your money and it's not about taking less risk. It's simply about understanding that wherever you chose to save or invest, the taxman normally takes part of your investment return. With an ISA he does not and you'll get more back. If you have savings or investments and don't use an ISA you're going to miss out on your share of this great giveaway."
© Fair Investment Company Ltd