Fresh Thinking

New ISA limits for over 50's

12th October 2009

with effect from the 6th October 2009 new higher ISA limits were introduced. These initialy apply to those who reach their 50th birthday before the 5th April 2010, so before the end of the current tax year.

The new limit is £12,200 of which £5,100 can be allocated to a cash ISA. The balance (up to the full £10,200 limit) can be invested into to a stocks and shares ISA.

Those of us under 50 will have to wait until 6th April 2010, i.e. the beginning of the 2010/11 tax year, for the new limit to increase from it's current level of £7,200 (£3,600 maximum in cash).

Changes to the minimum retirement age in April 2010

2nd October 2009

The minimum retirement age increases from 50 to 55 on 6 April 2010. At the moment it’s possible to use your pension to provide a tax-free lump sum and/or an income at any time after you reach the current minimum retirement age of 50. You don’t even need to stop working to do this. However, if you are over 50, or will be by 5 April 2010 – and you do not access your pension benefits by 6 April 2010 – you will not be able to take out any money from your pension fund until you are 55, up to five years away.

This could have significant consequences, in particular if you needed funds for a specific purpose before your 55th birthday; for example to help a child going off to university, finally taking that dream holiday, or paying off the mortgage.

The good news is that you still have options that let you retain this financial flexibility. If you think you might need a tax-free lump sum or an income from your pension fund before your 55th birthday, taking action now to pre-empt the increasing minimum retirement age could be the solution. However, it is vital that you also consider the impact this will have on your income later in retirement when the possibility of earning is no longer an option.

If you have any more questions you may want to read this guide or contact us to discuss this further.

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