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In the last Budget, the Chancellor Alistair Darling spelled out new plans to help people with an ISA – a little product that could save even more money when linked to an offset mortgage.

ISAs were created by the Government at the start of the 21st century to help people save more, tax-free. Essentially they are vehicles whereby you invest a certain amount and all the profits are tax-free.

In the past, the £7,200 tax-free ISA limit was up to £3,600 in cash and the entire £7,200 available in stocks and shares – you could invest as much as half your £7,200 ISA in cash and the rest in stocks, or invest the whole £7,200 in stocks. This doubled in the case of couples, giving them a limit of £14,400 between them. Any profits made on this investment are tax-free – so cashing in on your ISA to the limit can save you a lot of money over the year.

But things are soon to get even better – thanks to the new Budget plans, those over 50 will have their ISA limit increased to £10,200 by this month, and everyone else will have their limits increased next year – for couples that’s more than £20,000 of tax-free savings. So that means for those over 50, it’s time to consider using the extra £3000 ISA limit to make the most of tax breaks – you can invest up to £5,100 in cash or invest the whole £10,200 in stocks – it’s up to you and your adviser.

You can also link these investments to your offset mortgage – over 50s can now link as much as £10,200 as means of reducing their mortgage loan as well as any income from the ISA during the year being tax-free.

So talk to your adviser about your new ISA limits and how much tax you are in line to save. Offset has been a great way to make the most of your money, tax-free, and now you can add a tax-free savings vehicle on top of that.

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog.