ISA saving limit to rise by 480 pounds

The annual tax-free ISA savings allowance is to rise by almost £500 from next April, the Government has confirmed.

The Treasury said the allowance will rise from £10,200 to £10,680 on April 5 - slightly above estimates.

The Government announced in the Emergency Budget that it would increase the ISA allowance each year by the same percentage figure as Retail Price Inflation in September the previous year.

Figures released earlier this week showed that RPI was 4.6% in September.

Using this figure, it was expected the Government would announce a new allowance of £10,669.20, but the Treasury has set the new limit at £10,680 for the 2011-12 tax year.

It said that as many people have monthly saving plans, the figure should be easily divisible by 12.

Within the total, the amount people can save into a cash ISA will rise from £5,100 to £5,340.

Savers can put all of their annual allowance into an equity ISA, or they can split it between a cash account and an equity one, paying in a maximum of £5,100 into a cash ISA during the current tax year.

More than 20 million people, more than one in three adults, currently have an ISA.

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