If you are under 50 on 6 October 2009 you can invest a total of £7,200 in an ISA of which a maximum of £3,600 can be in a cash ISA for the tax year 2009/2010 which runs from 6 April 2009 to 5 April 2010.

If you are over 50 on 6 October 2010 you can invest a total of £10,200 of which a maximum of £5,100 can be in the form of a cash ISA for the 2009/10 tax year.

For the 2010/ 2011 tax year (6 April 2010 to 5 April 2011) everyone will be able to invest up to £10,200 with up to £5,100 in a cash ISA.

I suspect the reason for limiting the cash element is that the Government would rather see a rise in the stock market than a rise in cash deposits. They are also trying to encourage long term saving and the best place for long term returns is historically in equities - its a bumpy ride at times but the rewards should be worth it in the long run.

I was reading about the Budgets on this and various other sites last night and I came across the paragraph below on this web site last night.

From my understand its saying that they have increased the annual limit too £10,200 (this Oct for 50+ ppl and Apr 2010 for ppl under 50) and the cash allowance to £5,100, but if your under 50, you'll be unable to invest £5100 because this increase in the cash allowance is only for the people over 50 years of age. If your under 50, you'll have to invest the additional allowance of £3000 into stock and shares. Is that Correct or am I being stupid or will that £5100 cash allowance be open to everyone no matter your age (if your 16+).

"What's more, the amount that can be invested in cash ISAs is still limited to half the annual allowance - £5,100 for the over 50s, £3,600 for those under the age of 50. The remainder has to be invested in a stocks and shares ISA, but some people are reluctant to do this. Why restrict the way individuals can invest their own money in this way? It would be fairer, and simpler, to allow people to invest the entire amount in a cash account if that's what they want to do."

Quote from moneysupermarket.com

• Savers receive Budget boost

  Kevin Mountford, 22 April 2009

Any answers will be greatly appreciated,

Cheers

Marcus ;)