It was surely never the intention of the Isa legislation that cash Isas should only be of value to higher-rate taxpayers".
The move is the second piece of welcome news on Isas this year; in the budget in March, the Isa investment limit was increased to £15,000 a year with effect from 1 July.
Some have described the changes as the death of the cash Isa, but is that really the case?
First-time buyers are being offered up to £3,000 each to put down as a home deposit through a new help-to-buy Isa unveiled in the chancellor's budget.
First-time buyers who save in a help-to-buy Isa will have their savings boosted with a payment from the government when they decide to buy a property.
Since last August, when the Bank of England's lending scheme came into operation, the average interest paid on a cash Isa has fallen from 2.5% to 1.8%, while some of the deals from the major high street names have fallen even further.
He added: "With the fully flexible Isa, people will have complete freedom to take money out and put it back in later in the year, without losing any of their tax-free entitlement".
The maximum amount that can be put into the Isa and boosted is £12,000, with the government's payment topping this up to £15,000.
"Anyone who invested in a stocks and shares Isa in March 2003 should be very pleased with their return.
Osborne said: "The help to buy Isa will support over a million first-time buyers achieve their dream of earning their own home – and with one badly thought-through policy, Ed Miliband would put all that at risk.
The flexibility in annuities is a welcome step, as is the Isa limit increase, but it remains the case that people are simply not saving enough from a young enough age.
