The 2012/13 ISA allowance

The publication of inflation figures this month means that the new Individual Savings Account (ISA) allowance for the 2012/13 tax year will be £11,280.

The new ISA allowance, which will become available from 6th April 2012, is £600 higher than the current limit of £10,680 for 2011/12.

Individuals will be able to invest up to £11,280 into an investment ISA in the next tax year. Alternatively, they can invest up to £5,640 into a cash ISA with the remainder up to the total allowance of £11,280 available to invest in an investment ISA.

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Increases to the ISA allowance, which are now based on the Consumer Prices Index (CPI) inflation figure for the year to the previous September, are rounded up to be easily divisible by 12. This makes it easier to calculate the monthly allowance, which will be £940 per month for 2012/13.

The higher ISA allowance represents good news for savers and investors who want to protect their returns from tax and aim to achieve a net return to keep pace with high levels of price inflation.

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