ISAs
What is an ISA?
Individual Savings Accounts (ISAs) allow investors to hold UK and overseas shares, corporate and government bonds, cash deposits and certain life assurance policies, in a tax efficient manner.
ISA Changes for 2008 – A summary
On 6th April 2008 the ISA and PEP rules changed. The main tax benefits remain; ISAs are still be free of Income Tax and Capital Gains Tax making them an important part of most investors’ portfolios. The Chancellor has also confirmed that ISAs are to be a permanent savings vehicle, making them available indefinitely. The key changes are:
- Mini and Maxi ISA types no longer exist
- In their place will be a ‘Cash ISA’ and a ‘Stocks and Shares ISA’, and you can invest in both within the same tax year.
- Investors can hold two separate ISAs each tax year; a cash ISA and a Stocks and shares ISA, and these can be held with different providers.
- The maximum Cash ISA allowance per year is £3,600
- The maximum Stocks and Shares ISA allowance per year rises to £7,200
- The combination of the two is subject to an overall ISA investment limit of £7,200 per tax year.
- Mini cash ISAs, TESSA-only ISAs (TOISAs) and the cash component of any existing Maxi ISAs will automatically become Cash ISAs.
- Mini Stocks and shares ISAs and the Stocks and shares component of any existing Maxi ISAs will automatically become Stocks and Shares ISAs.
- All PEPs (Personal Equity Plans) will automatically become Stocks and Shares ISAs.
- Any automatic changes to Mini ISAs, Maxi ISAs, TOISAs and PEPs will not affect your annual ISA allowance for the 2008/2009 tax year.
- ISA savers will be able to transfer money saved in their Cash ISA to their Stocks and Shares ISA without affecting their current year’s allowance (as long as they are aged 18 or over), but not vice versa.
Please see our ISA Changes frequently asked Questions for more details.
