In his fourth Autumn Statement the Chancellor George Osborne confirmed planned increases in Isa limits, in good news for savers, but expected changes to child trust funds did not materialise.
There was much speculation that investments in peer-to-peer lending would be able to be placed into an Isa, but that did not appear in the Chancellor’s speech.
Isa allowance increases
The Chancellor announced that the total amount that savers can hold tax-free in an Isa in the 2014/15 tax year will be £11,880. This is an increase of £600 from this year’s allowance of £11,280
This is the overall limit across both cash savings and the amount that can be invested in a stocks and shares Isa. Savers will be able to save a maximum of £5,940 in a cash Isa, and a further £5,940 can be invested in a stocks and shares Isa in the 2014/2015 tax year.
In welcome news for savers, there was no mention of a lifetime cap on the amount of money that can be held in Isas. The government was rumoured to be considering introducing a £100,000 cap on the amount of money that could be invested tax-free in Isa savings.
Go further: Best rate cash Isas – we show you the best paying tax free accounts
No rule change for Junior Isas
In disappointing news for young savers the chancellor has not taken action to remove the block on transfers from Child Trust Funds to Junior Isas.
Which? research last year found that rates available on Junior Isas were on average one fifth higher than those available on Child Trust Funds. We want the government to allow transfers so that families saving for their children are able to access the best rates possible.
The amount that can be saved in Junior Isas will increase for 2014/15, from £3,720 to £3,840. The same annual limit applies to Child Trust Funds.
Go further: Junior Isas rated – children’s savings accounts reviewed by Which?
Go further: Child trust funds – the range of accounts current on offer