Increased ISA allowances

New allowances for Individual Savings Accounts (ISAs) – which offer tax-free returns on investments – have now come into force.

For the 2012/13 tax year, the total amount that can be invested into an ISA has increased to £11,280 (previously £10,680), of which a maximum £5,640 can be invested in cash. The remaining £5,640 can be invested into a stocks and shares ISA with either the same or a different provider.

Junior ISAs are also now available, and have been in force since 1 November 2011, as alternative to child trust funds (CTFs) which have since been disbanded (although CTF vouchers may still be cashed in). Like their adult counterparts, Junior ISAs are tax-free, although the annual allowance limit is £3,600 which can be invested in either cash or stocks and shares.