Over-50s urged to take advantage of extra ISA allowance

F&C Investments is urging the over-50s with disposable income or savings outside of tax-efficient accounts to take advantage of the extra Individual Savings Account allowance that comes into effect on 5 October.

In April's Budget, the Government announced an increase in the annual ISA allowance from £7,200 to £10,200. The change will initially only be available to investors aged 50 or over but will be extended to all investors eligible to take out an ISA from 6 April 2010. The maximum that can be put into a cash ISA will rise from £3,600 to £5,100 (in each case half the annual subscription limit).

According to latest Government statistics (which cover ISA subscriptions in the tax year 2006/7), older investors are more likely to take advantage of their ISA allowance. The figures, released in June 2009, show that of the 12.76 million people who subscribed to an ISA that tax year, 7.45 million (58.4% of the total) were aged over 45. For those subscribing to the stocks and shares component of an ISA only, the age divide is even more marked: 1.5 million of the 2.4 million investors, or 63.3%, were aged 45 or over (source: National Statistics).

Jason Hollands, Director, F&C Investments, said: "Whoever wins the next General Election, the pressure is on to reduce Britain's deficit, and that means spending cuts and tax rises are firmly on the agenda. The current Government has already announced a 50% tax rate for the highest earners, which an incoming Conservative government would be unlikely to reverse as an immediate priority. Many of those affected will likely be in the last decade or so of their full-time working lives. This extension to the ISA allowance should be grabbed with both hands, as it allows investors to shelter more of their hard-earned cash from both income and capital gains tax. It's just a shame that the extra allowance has taken six months to kick in, as the stock market rally we have seen since March would have provided another welcome boost to investors' assets."