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New ISA limits for 2011-12

Index-linked increase will take ceiling to £10,670

Around 18m ISA savers should see their 2011-12 limit rise by £470, an increase of 4.6%. The tax-free allowance is due to increase in line with September’s inflation figure, which was published this week. New limits will be confirmed in the next few weeks. 

Transparent piggy bank with money being dropped in

ISA savers  

Individual savings accounts (ISAs) were first introduced in 1999 and are a popular way of saving. An estimated 14.9m people paid money into one in 2009-10. The total was split between 11.9m cash ISAs and 3m stocks and shares ISAs. The rules about where and what you can invest will stay the same for 2011-12, so £10,670 can go into a stocks and shares ISA, or £5,335 into a cash ISA. 

Best Interest rates   

Cash ISA rates have fallen considerably in recent years, following the reduction in Bank of England base rate to 0.5%. Many accounts offer less than this, with the poorest paying 0.10% and below. In order to find the best cash ISA rates, it is necessary to shop around each year and compare providers carefully. Savers may have to make an ISA transfer to get a decent rate. Best rate cash ISAs are currently paying 2.8%, tax-free. 

Stock market recovery  

Stocks and shares ISAs have seen a revival in interest since the stock market recovery during 2010. As cash ISA rates have fallen and increasing number of savers have moved into shares, with total number almost doubling in the last five years. 

pound coins

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