The Chancellor has announced that tax-free Isa limits will rise each year in line with inflation.

From April 2011 they will increase in line with the Retail Prices Index (RPI) inflation measure, which includes housing costs. However, this is not a permanent change as the Government says it will remain in place for "the whole of the next Parliament".

If RPI is negative, as it has been over recent months, the limit will remain frozen.

As had already been announced, the limit for cash and stocks & shares Isas is set to rise next month from £7,200 to £10,200 per person, for all (see the Full Isa guide).

The cash Isa rate is rising from £3,600 to £5,100 at the same time, which we already knew. The limits increased by the same margins last October for the over 50s.

You'll be able to invest up to £10,200 per tax-year in a stocks and shares Isa from April, though for every £1 you put in a cash Isa, you lose £1 in your stocks and shares allowance.

Next month's change, and previous rises, were announced as individual moves, but the new policy ensures regular increases every year.

Further reading/Key links

Top rates: Cash Isas, Isa Transfers, Full Isa guide, Top Taxable Savings

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