Only green ISAs may get limits raised -report

Any future increase in ISA limits could be exclusively reserved for green/low carbon ISAs, according to a new report commissioned by the Government.

The Green Investment Bank Commission today released its suggestions for the establishment and funding of a new financial institution to finance green investments. It estimates £550bn is needed between now and 2020 for the scheme.

As part of its report, the Commission is keen to attract retail investors as an alternative source of income to institutional money.

Green ISAs will be able to invest in the same products as current ISAs such as OEICs and ETFs, but they must have a green or low carbon emphasis.

"Future tax-free savings limit increases could be exclusively reserved for green/low carbon ISAs," the report says.

"A green ISA could take many forms, but it must fill any gaps created by the introduction of the RDR, which will alter the dynamics of the IFA market and may create an opportunity to target retail customers affected by this change."

The Commission calculates a £3,000 increase in the tax-free saving limit would cost less than £50m, while a £5,000 increase cost less than £70m.

It also offers an alternative solution whereby a proportion of existing and already announced allocations are made eligible only for green ISAs.