Investors who were hoping to shelter more of their savings from tax in the 2016 financial year have been dealt a blow as the Chancellor announces the annual allowance has been frozen at £15,240.
George Osborne’s Autumn Statement also reveals that the Junior ISA annual limit has been kept at £4,080.
Maike Currie, associate investment director at Fidelity International, says it is a kick in the teeth for ISA savers.
The increase is typically based on September’s inflation figures and although we’ve been in negative territory any increase would have been welcomed by investors.
‘It is important that savers use as much of the current allowance as they can, and in particular, it makes good sense to take advantage of the fact that the allowance applies to an individual, so for a couple this year’s ISA allowance is a generous £30,480 – twice the individual £15,240 allowance,’ Currie says.
Gareth Shaw, head of consumer affairs at Saga Investment Services, says the freeze is bad news for the over-50s who use ISAs as an integral part of their retirement planning.
‘The ISA allowance has become a lot more generous, but the freeze will disappoint all those using these popular accounts to fund their retirement,’ he says.
ISAs were launched in 1999 with an annual allowance of £7,000. The limit was increased progressively from 2009 onwards and raised dramatically from £11,880 to £15,000 in July 2014.
The Chancellor has also announced that the basic state pension will rise by £3.35 to £119.30 a week next year, the biggest rise in 15 years. He says this will make pensioners £1,125 a year better off.