New ISA limits ‘all sizzle and no sausage’

| April 29, 2014
鈥漀ew

Government plans to help elderly savers by increasing the limit on tax-free savings will have little effect, a financial expert has warned.

Kevin Mountford, savings expert at Moneysupermarket.com, said the increased limit on cash ISAs – from 拢3,600 to 拢5,100 – is worth a paltry 拢1.89 in tax savings on interest payments.

The 拢1,500 increase – which applies to savers over-50 from October – is worth so little because interest rates on savings accounts are at an historic low.

Even if savers manage to find a higher interest ISA account for their extra 拢1,500, they will only boost their income by 拢5.25 in six months.

“It’s all sizzle and no sausage,” Mountford said.

“The change does very little to help savers.”

He added that Alistair Darling’s budget “will only scratch the surface of a deep rooted problem”.

Research by Moneysupermarket.com found that 61% of savers think raising the limit on ISA savings was only a step in the right direction, and that more needs to be done.

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