Money Saving Tips

What do the new Isa limits? Chancellor Alastair Darling has raised the overall Isa limit from £7,200 to £10,200, enabling the over 50s to save from autumn. It is worthwhile looking at how it will work best for Isa accounts, as though changes seem to be relatively straight-forward, it has make only a little difference for cash savers. The basic facts about these changes: The raised overall Isa limit from £7,200 to £10,200 from April next year means a maximum of £5,100 can be put into a cash Isa, while the remainder can be put into a stocks and shares Isa. However, the limit will rise early for those aged over 50 on October 6. More money can be put into stocks and shares than a cash Isa, because cash Isas currently have a maximum limit of half the annual tax-free allowance. Share Isas can take up the full amount.ie., if you deposit £4,000 in a cash Isa next year, you could put up to £6,200 in a stocks and shares Isa. The last time the Isa limit was raised, a larger proportion of the extra tax-free entitlement was given to Isas but, this time for cash savers, the current status remains. It is important to know whether the extension of £1,500 to cash Isa limit is going to help your monthly income. Exactly, it will not, because, the minimal rise to cash Isa levels will have little effect on the deprived savers as they are intended to help. For example, the raised limit would only result in an approximate extra £50 a year if a saver invested the full £5,100 in a top-paying cash Isa. If you are over 50 and plan to take advantage of the new limit from October this year, there are certain facts you need to know : * If you are currently planning to deposit the maximum amount into a regular ISA saver, make sure it is one of those that allows you to raise your monthly contributions should you wish to, or else you may be unable to take advantage of the rise in the tax-free limit before the end of the tax year, 2010. Alternatively, savers with a lump sum ISA, should be able to add more into their tax-free savings from October. * If you are not 50 on 6 October and (turning 50 in December this year), you can still take advantage of the new limits on or after your fiftieth birthday ,if it is before 6 April 2010. How does the increased limits apply: It will apply to new Isas launched, or existing Isas, and providers have been given until 6 October to update their systems. The other aspect of Isas been changed: For example, as always, money can be moved from a cash Isa to a stocks and shares Isa, but not vice versa. Isas remain a one-way system