October 2009 is the month when the ISA limit increases and research conducted by high-street bank Lloyds TSB shows that 61% of over 50s do not understand the approaching ISA changes.

And the changes, which were announced by the Chancellor in the April 2009 budget, will see ISA rates increase from £7,200 to £10,200 (£5,100 which can be saved in cash), effectively increasing tax free savings for over 21 million savers. And the crunch is, for those born on, or before 5th April 1960 the new limits come into effect on October 6th, whilst younger customers will need to wait until the start of the 2010/2011 tax year next April.

Given the favourable over 50 status of the changes, it has surprised many that only 15% of over 50s know that the new ISA limit will be set at £10,200. Four out of ten over 50s were not even aware that increases have been announced.

Colin Walsh, managing director of savings and investment, Lloyds Banking Group, said, stoically:
“As the UK’s largest ISA provider, we want our customers to be able to reap the benefits of the new rules and make use of their entitlement. This historic low rate environment has meant a challenging time for savers, especially for those who rely on returns to supplement their monthly income, so maximising your full tax free allowance has never been more important.

“Traditionally the ISA transfer market peaks in April around the new tax year, but this year’s changes will no doubt result in a ‘mini ISA season’ as savers look to take advantage of competitive rates on an increased balance.”

Lloyds TSB has made it clear that savers will be able to top up their existing ISA balance in any of the Group’s fixed and variable rate cash ISAs, as well as investment ISA products. What’s more, new customers can also take advantage of the new entitlement and open one of the products offered by the Group’s ISA brands, including Halifax, Lloyds TSB, Scottish Widows, Bank of Scotland, Cheltenham & Gloucester, Birmingham Midshires and Intelligent Finance.

Lloyds TSB also participates in electronic transfers for the cash ISA market, allowing customers to benefit from what they claim is a more efficient process and reduces the delays caused by sending cheques in the post.

Guest Article by Neil Camp