The annual limit on the amount people can save into an individual savings account (Isa) is set to be raised to £15,000 from July 1 this year.
The previous limit for stocks and shares Isas was £11,520 while the limit on cash Isas was £5,760.
George Osborne announced in today’s Budget speech that he would scrap the seperate Isas and create the New Isa with a limit of £15,000 in which savers could invest in either cash or stocks and shares.
The chancellor also announced that the initial 10p rate on income from savings was being scrapped entirely, in a move that would benefit 1.5m low-income savers. Currently non-dividend savings income is taxable at 10 per cent on income up to £2,790, provided the saver has no other taxable income.
The chancellor said the government would “almost double this zero-pence band to cover £5,000 of saving income”.
Daniel Godfrey, chief executive of the IMA, said: “I want to congratulate the chancellor on the increase in the limit and simplification of the Isa scheme.
“The New Isa will encourage savings that will build the resilience of citizens and encourage a flow of capital to industry that will drive GDP growth, create new jobs and produce the tax revenues that underpin infrastructure, education and the welfare state.”
He also unveiled plans for a new pensioner bond and efforts to give pensioners a greater degree of control of their savings and access to “impartial advice”.
The pensioner bond will be available for all those aged more than 65 and issued by the National Savings and Investments from January 2015.
Mr Osborne said the exact rate of interest on the bond would be set this Autumn but his “assumption is 2.8 per cent for a one year bond and 4 per cent on a three year bond”.