Savers to benefit from a near trebling of the cash ISA limit and given greater choice in how they save.
From today (Tuesday 1 July) millions of savers across the country will benefit from a near trebling of the cash ISA limit; from £5,760 in 2013/14 to £15,000 in 2014/15.
The radical changes, which were announced by Chancellor George Osborne at the Budget, amount to the biggest increase ever in ISA limits.
Find out more about what the changes mean for you by reading our short factsheet on the New ISAs.
Savers will also be given greater choice in how they save their money between cash and stocks and shares ISAs.
At the same time the annual subscription limits for Child Trust Funds (CTFs) and Junior ISAs are increasing to £4,000 to enable families to save more for their children in a tax-advantaged way.
The introduction of the New ISAs (NISAs) comes as research from consumer organisation Which? reveals that 40% of those who know all about the changes say they will encourage them to save more money.
Chancellor of the Exchequer George Osborne said:
We want to support savers at all stages of their life and make sure they have greater flexibility and choice over how they access their savings.
That’s why as part of our long-term economic plan we announced a radical package of measures at Budget – reducing taxes for the lowest income savers, reforming ISAs and giving people flexibility over their pensions.
Today’s introduction of the New ISAs is a big boost for millions of people, giving them greater economic security by putting aside money in savings.
Over 23 million adults – roughly half of the UK adult population - have an ISA, with over 5 million people estimated to be subscribing to an ISA at the cash limit and 1.3 million subscribing at the stocks and shares limit and therefore likely to benefit immediately from the changes.
In 2018/19, over six million people stand to gain from the increase in ISA limits to £15,000.
The size of ISA holdings increases with age; the average amount of ISA savings in the under 25 age group at the end of 2010/11 was £4,490 compared with £29,880 in the 65 and over age group.
Within England the adult population holding ISAs is highest in the South West at 50.9% and lowest in London and the North East, at 42.5% and 42.3% respectively.
Looking across the UK, the proportion of adults with ISAs are evenly distributed through England (46%), Wales (46%) and Scotland (46%), however, the number is lower in Northern Ireland (37%).
ISAs are Individual Saving Accounts. ISAs are tax advantaged cash and/or stocks and shares accounts under which any income received by account holders in the form of interest and dividends is free of tax, and on which there is exemption from capital gains tax on any capital growth.
ISAs are popular with savers across the income distribution. The majority of ISA holders (7 million) have annual incomes of between £10,000 and £19,999, and another 6.3 million have annual incomes below £9,999.
The average balance of ISAs are as follows: England (£16,820), Wales (£14,930), Scotland (£15,370) and Northern Ireland (£13,130)
At the end of 2012/13 the market value of adult ISA holdings stood at £443 billion, up 14.1% from the value at the end of 2011/12. These holdings are currently split almost equally between cash ISAs and stocks & shares ISAs
|Region||Number of people with ISA|
|Yorkshire and the Humber||1,882,000|
|East of England||2,209,000|
|Region||Numbers at the ISA limit|
|Yorkshire and the Humber||498,000|
|East of England||654,000|
|Overseas and Unknown||23,000|
Image by Ken Teegardin on Flickr. Used under creative commons.