Isa allowance to go up in April

Piggy bank Savers have faced a long period of low interest rates

The upper limit on the sum that can be saved in an Individual Savings Account (Isa) will rise by £480 next year.

In line with an announcement made in the Budget, the rate of inflation in September will determine the Isa threshold from the following April.

So, the annual Isa limit is expected to rise from the current level of £10,200 to £10,680 in April 2011, or £5,340 for a cash-only Isa.

More than 20 million UK residents are estimated to have a tax-free Isa.

Entitlement

"With rising taxes, savers and investors really should make sure they put as much as they can in their Isa each year," said Rob Fisher, of Fidelity Investment Managers.

"Over 42% of the UK population are still not taking up their Isa allowance. Isas are an all year round use-it-or-lose it tax perk and a perfect way to avoid giving hard-earned money straight back to the taxman."

Tax-free Isas were introduced in the UK 11 years ago to encourage people to save.

Half of the total can be saved in cash, with half, or all, in stocks and shares.

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