The annual allowance for individual savings accounts will rise to £7,200 next month, an increase of £200. Of this total, savers will be able to put £3,600 into a tax-free cash Isa, up from £3,000. The Budget also confirmed the ability to transfer funds from cash Isas to stocks and shares Isas from April, the conversion of Peps into Isas, and the scrapping of the confusing distinction between "mini" and "maxi" Isas.

Separately, the chancellor rejected lobbying by the life insurance industry for investment bonds to enjoy better tax treatment. Instead, investors face continuing to pay tax at up to 40 per cent on these bond returns, compared with just 18 per cent on gains from competitor investments such as unit trusts. Steve Lodge