Increased Isa allowances 'set to be utilised'

Levels of individual savings account Isa business are set to surge when the increase tax-free allowance comes into force for all consumers, it has been reported.

From April 6th 2010, all savers will be able to place a total of £10,200 in tax-free accounts, up from the £7,200 permitted during 2009-10.

And according to the Fidelity FundsNetwork Adviser Sentiment Index, 87 per cent of financial advisers believe savers will take advantage of the £3,000 increase.

Some 75.8 per cent said their over-50 clients had been using the increased Isa allowance since it became available to them in October 2009.

Peter Hicks, head of UK retail sales at Fidelity FundsNetwork, said: "It is interesting to see that there is already demand from clients to utilise the extra £3,000 allowance when it becomes available in the next tax year.

"To be able to shelter £10,200 each year from the tax man is a big deal. Over time with accumulation, that money could be used towards education, paying off a mortgage or even retirement."

Last week, Rachel Mason of the Fair Investment Company told Reuters that consumers should always aim to maximise the use of their tax-free Isa allowance.

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2010-03-03 09:10:58 © Moneyextra.com