ISA Limits To Remain Unchanged 03/12/2004

Plans to reduce the maximum contributions allowable into Individual Savings Accounts(ISAs) have been put on hold until 2009, the Chancellor Gordon Brown announced yesterday.

Currently consumers can invest £3,000 a year in a cash savings account, £3,000 a year in equity, and £1,000 in insurance.

The ISA was created as a tax-efficient way to encourage those on low incomes to save for their future. Money can be withdrawn from the product without a notice period or penalty charges, and interest earned is tax free.

However, the Government was planning to reduce the amount of money that could be saved in cash each year from £3,000 to £1,000 after April 2006.

"To help savers it is right to extend the tax free advantages for the first £7,000 of savings - £3,000 for the cash component - in individual savings accounts each year. So I will consult on extending the ISA limit for another five years to 2009," said Mr Brown.