Savers have been given a glimmer of hope of better returns in the future after the Chancellor announced plans to increase the annual Isa allowance in line with inflation each year.
With Bank of England base rate at a record low of 0.5%, savers have had a hard time making their money work for them. And with paltry interest returns and inflation currently running at 3%, the real value of people's savings is being eroded as prices increase.
The Government is also making the rules on Isas simpler by increasing the limits for everyone to £10,200 a year. Those over 50 already benefit from the increase and everyone else will have the threshold lifted from £7,200 on April 6.
Of the new £10,200 tax-free savings allowance, £5,100 can be held in cash and the rest in an equities Isa.
Alistair Darling said that from now on the annual allowance will rise in line with inflation each year.
Around 19 million people currently have an Isa, with savings in the accounts, which were introduced in 1999, totalling £270 billion.
Commentators predicted the move would mean Isa allowances would increase by around £1,000 to £11,200 within five years, based on inflation of around 2%.
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