The budget and your savings

Here is a brief summary of how savings and investments have been affected by the budget.

ISAs

For those over 50, the annual limit for tax-free ISAs is to rise from £7,200 to £10,200 in 2009/10. Of that amount, £5,100 may be saved in Cash (previously only £3,600). The over 50s will be able to take advantage of the higher rate from October 2009 with the higher limits applying to all investors from 6 April 2010

Pensions

The basic state pension is to increase by at least 2.5%, regardless of inflation.

Pension Credits

From November2010, the limit on savings pensioners can have before their Pension Credit is reduced is to be raised from £6,000 to £10,000. According to Alistair Darling this will help pensioners by an average of £4 per week.

Limiting tax relief on pension contributions

From 6 April 2011 tax relief on pension contributions will be restricted for high earners with taxable income in excess of £150,000, with ‘anti-forestalling’ provisions to prevent individuals from benefiting from extraordinary contributions made prior to that date.

Grandparents

Working age grandparents who give up their jobs to care for their grandchildren may receive benefits from of April 2011. From this date, those who obtain a certificate showing that they spend more than 20 hours a week looking after grandchildren under 12 would earn NI top-ups to increase the value of their state pension.