How is the ISA limit changing for 2011-12?

Whether you're a keen investor or are simply looking for a way to improve your savings, understanding the changes to the ISA limit could help you to make sound financial choices.

As of April 6th 2011, the ISA limit will be set at £10,680 until the same date the following year.

Changing in line with the retail price index, this ISA limit is up from the £10,200 allowed in the period 2010 to 2011.

Of course, you'll enjoy the same tax-free benefits that come with all ISA packages.

How do the ISA limit changes affect me?

The ISA limit changes fundamentally give you the opportunity to make more tax-free savings - something that will attract seasoned investors and newcomers alike.

The £10,680 ISA limit is divided into two, between cash ISAs and stocks and shares ISAs. This allows you to contribute £5,340 into each - up from £5,100 during the previous financial year.

Additionally, the government has ensured that the monthly - and annual - ISA limit is a multiple of £120, which will allow those with monthly savings to make clean calculations of their fiscal situation.

What can I do to make the most of the new ISA limit?

The new ISA limit will allow you to make greater tax-free savings over the course of the year, so it is important that you make the most of opportunities available to you.

While the new ISA limit will not mean you need to make any fundamental changes to the way you save, you will find that - with the chance to save more - making the right choices when it comes to your investments is even more important.

If this is your first time using an ISA, it is important to bear in mind that there are some key choices to make before coming to a final decision.

The first of these is whether you are happy to lock your money away for a set period. Doing so can mean you benefit from the better interest levels of a fixed-rate ISA, but it will mean you cannot access your funds whenever you please.

Alternatively, you can choose an instant-access ISA, which will allow you to withdraw money whenever you like, but could mean you receive less interest.

Regardless of your choice, you should keep an eye on the ISA rates for your account. If these become less competitive in comparison to others on the market, do not be afraid to switch to a more advantageous deal to get the best from the new ISA limit.

However, when doing so make sure you arrange a transfer of your balance, rather than withdrawing your money and depositing it in a fresh account. Should you do the latter, you could find you no longer benefit from tax-free savings for the cash you have moved.

And to maximise your ISA limit savings benefits for the year, invest as much as you are able in your ISA account. This will prevent more of your finances being given to the taxman.

fundsnet:  Helping you manage your finances

Giving you greater control over your money, fundsnet was established to help put investors back in the driving seat when it comes to their finances.

And you'll find that with us you can also receive practical, independent advice that will help you to make informed fiscal decisions - including how to make the best of the increased ISA limit.

So, if you're keen to benefit from the higher ISA limit, why not manage your finances with fundsnet and enjoy a little more control?

If you would like to find out more about the services we provide or to discuss the ISA limit change, why not contact us today on 0845 241 3362 or send us an email?

When it comes to staying ahead of the curve with your finances, you'll find fundsnet is the ideal choice.