ISA allowance set for a hike

The ISA allowance could be set for a hike under chancellor George Osborne's emergency Budget next month.

According to an industry source, an increase in the ISA limit has been proposed, however details have yet to be confirmed.

Reacting to the news, Dan Kemp, fund manager and partner at Saltus Partners says: "Upping the ISA limit would be an obvious move if the proposed CGT changes go ahead. Long term saving is crucial if the government wants people to tackle personal deficits, and the CGT changes will hurt investors."

"The savings ratio has got to increase going forwards, so it would make sense for the government to offer savers a tax free haven in which they could put away money for the future. Individuals having savings alleviates debt problems for the future," Andrew MacDonald, manager of Progressive's UK Smaller Companies fund says.

Ben Willis, head of research at Whitechurch Securities says increasing the ISA allowance will boost investors hit by changes to CGT.

"From a sweetener point of view, this makes total sense. Increasing the ISA rate would soften the blow from the huge CGT changes proposed. We would definitely welcome that message. The government in the past has made it so unappealing for investors to put money aside – not allowing them to reclaim the 10p tax on dividends and tiny rises in the ISA allowance until very recently. The Budget promises to be a horror story, so any light relief such as this would be very welcome indeed," says Willis.

The Treasury refused to rule the plans out.

"There will be a lot of options put to George Osborne, but details of what will be in the Budget won't be disclosed until 22 June," a spokesperson at the Treasury says.