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April ISA Time of Change for Savers

Changes to the rules governing Individual Savings Accounts (ISAs) are about to be implemented.  With the government encouraging more people to start saving, the changes, which will be effective from 6th April 2008, are anticipated to make the process easier.

The maximum annual investment allowance has been raised to £7,200, with £3,600 available to be saved in a cash ISA with one provider.  The remaining sum can be invested into a stocks and shares ISA with either the same or a different provider.

April will also see the end of TESSA-only ISAs (TOISAs), Personal Equity Plans (PEPs), Mini ISAs and Maxi ISAs.  Mini cash ISAs, TOISAs and the cash component of a Maxi ISA will automatically become cash ISAs, while PEPs and the stocks and shares component of a Maxi ISA will be classified as stocks and shares ISAs.

Transfers of cash from cash ISAs to stocks and shares ISAs are now also made available, with cash savings from previous years available to be transferred without any effect on the annual investment allowance.  The life span of ISAs has also become indefinite.  There is no set date for ISA saving to end.

Following the government initiative to encourage a saving culture, the changes have been brought about to simplify the process of saving.  Any changes to legislation can seem like a complex set of new rules to understand, but these changes really have removed a lot of confusing jargon and acronyms, simplifying ISA rules to just two categories – cash and stocks and shares.  HMRC are hoping that the 2008-2009 tax year will see a significant increase in saving.

This article has been provided by UK200Group.

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