Millions of savers aged 50 or over can earn extra tax-free interest from next week, following an increase to Individual Savings Account (ISA) limits.
From 6 October, the amount that these savers can put into a cash Isa rises £1,500 to £5,100 a year, or to £10,200 in total for those investing in stock market ISAs.
The higher limits apply to over-50s opening new ISAs as well as those who have already taken out ISAs this tax year, so offering the potential to top up existing 2009/10 accounts. Younger savers have to wait until the new tax year next April to take advantage.
But aren’t savings rates near zero? Savings rates have fallen but it’s still possible to pick up three per cent - more from fixed-rate offers (see www.moneyfacts.co.uk for the top accounts). And an ISA isn’t subject to up to 40 per cent tax for higher-rate taxpayers.
However, with the stock market up strongly in recent months, some experts believe stocks and shares ISAs could be a better bet. With these, all income and profits are sheltered from tax.
How do I top up? This should be straightforward in most cases, though a few firms, including Egg, aren’t accepting the extra ISA allowance, while some may not give as good a deal on top-ups as on existing savings.