Savers to benefit from a near trebling of the
cash ISA limit and given greater choice in how they
save.
As
of yesterday (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 ourshort 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%).
Further information
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
Regional breakdown
Region |
Number of people with ISA |
North East |
880,000 |
North West |
2,547,000 |
Yorkshire and the Humber |
1,882,000 |
East Midlands |
1,646,000 |
West Midlands |
1,948,000 |
East of England |
2,209,000 |
London |
2,734,000 |
South East |
3,394,000 |
South West |
2,171,000 |
Region |
Numbers at the ISA limit |
North East |
232,000 |
North West |
674,000 |
Yorkshire and the Humber |
498,000 |
East Midlands |
437,000 |
West Midlands |
513,000 |
East of England |
654,000 |
London |
808,000 |
South East |
1,078,000 |
South West |
648,000 |
Wales |
299,000 |
Scotland |
463,000 |
Northern Ireland |
106,000 |
Overseas and Unknown |
23,000 |