Individuals can currently invest £10,680 into the account, split between cash and stock and shares.
However, Andrew Bennett, a spokesperson for HM Revenues and Customs has confirmed that this figure will rise from April to £11,280, of which £5,640 can be saved in cash.
The Isa limit is linked with the CPI inflation rate in the September of the preceding year.
This means that today’s announcement from the Office for National Statistics of CPI inflation at 5.2 per cent will see the Isa limit increase accordingly.
The increased limit is then rounded by £120 to allow for monthly payments to be made into the account.
It is hoped indexing the limits on an annual basis will help to retain the value of the limits in real terms.
The limit was previously linked to the retail prices index.
Isas are tax-efficient savings accounts, accountholders do not pay any tax on the interest or dividends received and any profits from investment are free of Capital Gains Tax.
A Junior Isa will be available from November for children who are not eligible for a Child Trust Fund and will have a limit of £3,600.