5th December 2013
Isa investors will be able to save £11,880 from next year up from £11,520. The increase is roughly in line with the Consumer Price Index.
This comes despite some speculation that a lifetime limit or cap might be placed on the amount that could be invested in an Isa over a lifetime. The concerns were thought to have been stoked by the existence of Isa millionaires who had benefited from both the Isas and Peps. It appears that this may be a fortunate but rather small minority.
The Chancellor George Osborne also made no mention of decreasing the amount that can be saved into a pension tax efficiently. In the last few Budgets, these amounts, though still substantial, have been cut back.
Planned cuts to the lifetime limit for pension relief will still come into force from next April when it falls to £1.25m, while the annual limit is to be cut to £40,000 though investors may be able to use unused reliefs from previous years.
Industry experts have frequently warned that cutting back on pension limits sends the wrong message when the government is introducing widespread workplace reforms so there is some relief the screw has not been tightened further.
Kevin LeGrand, Head of Pensions Policy at pension firm Buck Consultants says: “The considerable efforts and investment of the DWP and much of the pensions industry over the past few years, in trying to secure a stable workplace pensions system for the benefit of the whole of the UK, has constantly been undermined by the Treasury’s blinkered slashing of the very tax reliefs that underpin it. While there is room for sensible debate on the amounts and form of tax relief on workplace pensions, this does not seem to have been the basis of the Treasury’s actions.”
Further cuts to the lifetime limit had been suggested by some Liberal Democrats who wanted the lifetime limit to fall to £1m.
Some big financial firms have voiced other concerns around savings. Nationwide Building Society has complained that the cash Isa limit has not been equalised with the stocks and shares limit. It remains at half the stocks and shares limit.