Major savings reforms have been announced by Chancellor George Osborne in his budget announcement.

The 10% starting rate for savings will be abolished and a £5,000 tax free allowance will be introduced, representing an average gain of £150 per year.

Mr Osborne also announced that he would support households to save by introducing a New ISA (NISA) for cash and stocks and shares with a significantly raised annual limit of £15,000 tax free – trebled from the current rate of £5,760.

Previously, ISAs were split into two types: cash ISAs and stocks & shares ISAs. This reform will merge the two, with equal limits for both types, allowing savers for the first time to convert one kind into the other as they see fit.

The government will also raise the limits for Junior ISAs and Child Trust Funds from £3,720 to £4,000, with changes  introduced from 1 July 2014.

Savers will also be encouraged to invest in Premium Bonds, with the cap on investments  lifted for the first time since 2003, from £30,000 to £40,000, from 1 June 2014, to be lifted further to £50,000 in 2015-16.

NS&I will also now offer two £1 million prizes per month, rather than one, starting from the prize draw in August this year.

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