The new limit for the new ISAs, or NISAs, will be £15,000. Osborne said the scheme would increase the “simplicity, flexibility and generosity of ISAs”.
The government will also raise the limits for Junior ISAs and Child Trust Funds from £3,720 to £4,000.
He said today:
“There is a large group who have had a particularly hard time in recent years: and that is savers. And this matters not just because these are people who have made sacrifices to provide for their own economic security in retirement.
“It matters too because one of the biggest weaknesses of the British economy is that it borrows too much and saves too little. This has been a problem for decades and we can’t fix it overnight."
BSA Chief Executive, Robin Fieth said:
"The BSA has campaigned for years for the reformation of the ISA rules. Finally the Chancellor has listened and we are delighted that he has done exactly what we have been calling for: Increased the limit; delivered a single allowance which no longer penalises savers who want to invest in cash and allowed the transfer of funds in either direction between cash and stocks & shares ISAs. This will benefit many mid and lower income savers, especially those nearing retirement. We are also pleased that he has accepted the need to reform the 10p tax rate on savings, this new 0% rate must be simple for savers to claim."
Carol Knight, TISA operations director said:
“This is excellent news for savers. ISAs are extremely popular and trusted by the consumer and we are delighted that greater flexibility and simplicity is to be introduced. The ability to transfer from a Stocks & Shares ISA to a Cash ISA is particularly welcome and is something that we have long argued for. The added increase in the annual subscription limits for both Adult and Junior ISAs also reinforces the message that we all need to save more for our future financial wellbeing.”
Elissa Bayer, Senior Investment Director, at Investec Wealth & Investment:
“It’s encouraging to see that savers can benefit from a new breed of tax-free ISAs with an allowance of £15,000 and the end to the absurd rule that only allows savers to transfer cash ISAs into stocks and shares and not the other way round. This will boost the savings industry and allow basic rate taxpayers to benefit from greater flexibility. The radical change to the pension system, which means that around half a million people won’t have to buy an annuity, will benefit the economy in the long run as more and more people drawdown money from their pension and spend.
“The Government’s growth and fiscal reduction figures are attractive but there is still a long way to go – 2018 is a long way off. The idea that £4bn will be raised from people or entities that have illegally avoided paying tax and that the HMRC have been given the authority to get the money direct from people’s bank accounts, will be ugly and certainly not straightforward.
“As ever the question remains, where will the Government find the money to follow through with these ambitious plans?”
Jason Chapman, Managing Director at discount broker Willis Owen, commented:
“As usual with the Budget, the devil will be in the detail, but this looks like a welcome shot in the arm for ISAs and for the ability of people to build long-term savings. The new combined ISA gives savers greater flexibility, and should allow people to better manage their exposure to risk, especially when they’re nearing retirement.
“We’d like to see the Treasury go further in future though. In a recent poll, over half (58.6%) of our customers said they invest in an ISA to create income in retirement. Yet next year’s annual ISA allowance will be £15,000 while the tax-free allowance for pensions will be £40,000. If the Government is serious about boosting the national culture for saving, why not commit to increasing the ISA allowance further over the next few years?”
Andy Zanelli, head of retirement planning, AXA Wealth, commented:
“We welcome the direction of travel outlined in today’s announcements and believe this represents a clear move towards encouraging a culture of saving in the UK.
“Osborne’s overhaul of pensions will see more consumers seeking alternatives to annuities when securing their income in retirement. This underlines our own desire to see reform in the marketplace to give consumers access to a range of financial products that best suits their needs, and it is good to see alternatives, such as flexible drawdown and capped drawdown, given a boost in this Budget.
“The new combined ISA is a significant step toward greater simplicity for investors. Given the current low interest environment, cash ISA savers could get better returns from a stocks and shares ISA without the barrier of not being able to transfer back to cash at a later date. Combined with the new higher annual ISA limit this is a positive step to encourage more people to save.
“The Government’s guarantee of a free impartial advice session is a first step on a much needed journey to get people to engage with professional financial advice, which can offer people comfort in the future of their finances.
“All in all this Budget will help people to benefit more by investing and represents a clear encouragement of more saving in a tax efficient environment. However, even with this added flexibility consumers should take the time to understand exactly what this means for them.”
