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New tax-free savings limits for the over-50s

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Savers aged over 50 now have the chance to invest more in tax-free ISA savings accounts.

From 6 October, the limit on cash ISAs climbs from £3,600 to £5,100, an increase of £1,500. The allowance for stocks and shares ISAs also rises to £5,100.

Anyone of the right age wishing to use the full allowance can now invest up to £5,100 in a cash ISA and up to £5,100 in a stocks and shares ISA, or they can put £10,200 into a stocks and shares account.

The new allowances, which were announced in the Budget, will apply to all savers at the start of the next tax year, but those born on or before 5 April 1960 are being given the chance to take advantage of the new limits six months before everyone else.

Currently there are some 19 million ISA account holders of whom about a quarter use the full allowance. It is thought there are 6 million ISA savers who are over 50.

Banks and building societies have responded by setting up various options and products for savers who qualify for the new allowances, keen to attract people’s money in order to boost their own liquidity.

Some providers are giving savers the opportunity to top up variable rate but not fixed rate ISAs. Some providers are amending the rules to allow savers to add to their fixed rate accounts.

Others are insisting that savers who wish to add more to their ISA funds must open a new bond at a different rate of interest and with a different maturity date.