Isa News Lower Annual ISA Increase Expected After Inflation Change 18471580
Lower annual ISA increase expected after inflation change
24 March 2011 / by Paul Dicken
The measure for increasing the annual ISA allowance will move to using the Consumer Prices Index (CPI) rate of inflation from next year, the Chancellor disclosed in the Budget.
In a move which the Tax Incentivised Savings Association (TISA) called ‘disappointing’ the ISA allowance is to increase annually based on the rate of inflation measured by the CPI.
Last year the government said the ISA allowance would change each year in line with the rate of inflation measured by the Retail Prices Index – normally a higher rate.
The latest inflation figures published by the Office for National Statistics (ONS) this month showed CPI inflation was 4.40 per cent and the RPI rate was 5.50 per cent.
Based on RPI figures for September 2010, the annual ISA allowance will increase to £10,680 from 6 April 2011, with the cash ISA limit increasing to £5,340.
The Budget, published on 23 March said that as of April 2012 ‘the CPI will be used as the default indexation assumption for ISA limits.’
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