Save by taking advantage of the new ISA allowance today

In yesterday’s budget, Chancellor Alistair Darling announced changes to the tax-free threshold on Individual Savings Accounts (ISAs). This means there are substantial savings to be made if you know how.

What is an ISA?
Individual Savings Accounts allow banks to offer tax-free savings accounts to customers. The current cash limit that can be placed in an ISA each year is currently £3,600, with a further £3,600 tax-free allowance for investment in shares. Approximately 18 million Britons hold ISAs, with around 28% using their full allowance each year.

What has changed?
From 6th October 2009, anyone aged over 50 will sees the annual cash limit for their ISA rise to £5,100. The remaining or entire amount (£10,200) can be saved in stocks and shares. From April 2010, these changes will extend to the whole population.

Why take advantage of the changes?
As the Bank of England has slashed interest rates over the past 12 months, savers have seen their returns plummet. This is particularly bad news for retirees who rely on interest earned on savings as an income. Taking advantage of the new tax-free threshold on ISAs means that you will be able to keep more of your money in your pocket, as you will be able to put more money inside the tax-free wrapper where the tax man can’t touch it.

How can you make the most of it?
At TotallyMoney.com we have access to the best cash ISA currently on offer at NatWest giving a juicy 3.51% interest. As a basic rate tax payer, if you were to increase your annual deposits from £3,600 to £5,100, this would represent an extra £52.65 in your pocket. Not bad for 3 minutes work.

TotallyMoney.com allows you to search and compare ISAs quickly and easily. Simply visit www.totallymoney.com/banking and sort by ‘ISA’.  The table will show you the best option available, and an at-a-glance guide of each product.  Simply click on the product you want to apply for and you will be taken through the online application process.