People who want to shelter their cash from the taxman were given a boost after the Chancellor announced an increase in the allowance under tax-free ISAs to more than £10,000 a year.

People who want to shelter their cash from the taxman were given a boost after the Chancellor announced an increase in the allowance under tax-free ISAs to more than £10,000 a year.

The total annual allowance will rise from the current £7200 limit to £10,200, taking effect for those aged 50 and over from this year and extending to everyone in 2010. Alistair Darling said the cash limit within the overall allowance would rise from £3600 to £5100.

The Chancellor said almost £290bn had been saved in tax-free ISAs since their launch 10 years ago, with 18 million people taking them out. At present, savers can put up to £7200 in equities or a combination of equities and cash, growing free of tax. Mr Darling also offered help to pensioners with "modest" savings who have been hit by the record low interest rates.

The capital disregard limit on Pension Credit will be raised from £6000 to £10,000 from November, to allow pensioners to have more in savings before their level of help is reduced. The decision will see the 5.5 million pensioner households with savings of less than £10,000 gain £4 a week on average, according to the Chancellor.