20 November 2007

New ISA rules from 6 April 2008

Last Thursday (15 November) HM Revenue and Customs ("HMRC") issued further guidance on the changes to ISAs and PEPs which will take effect from 6 April next year.

The main changes are:

• The annual ISA investment allowance will rise to £7,200. With up to £3,600 of that allowance being able to be saved in cash with one provider. The balance of the £7,200 can be invested in stocks and shares with either the same or a different provider.
• ISA savers will be able to invest in two separate ISAs each tax year; a cash ISA and a stocks and shares ISA (Mini and maxi ISAs will no longer exist).
• Mini cash ISAs, TOISAs and the cash component of a maxi ISA will automatically become cash ISAs.
• Mini stocks and shares ISAs and the stocks and shares component of a maxi ISA will automatically become stocks and shares ISAs.
• All Personal Equity Plans (PEPs) will automatically become stocks and shares ISAs (thus enabling them to be invested in the full range of wider qualifying ISA investments). You will be able to invest in this, as long as you have not subscribed to another stocks and shares ISA in the same tax year. If you have any un-invested cash in your former PEP tax at a flat rate of 20% will be deducted from it by the ISA manager.
• ISA savers will be able to transfer money saved in their cash ISA to their stocks and shares ISA (but not vice versa).
  If you would like to find out more about how these changes will impact on your investments please contact your usual Hazlewoods tax contact, or Kyle Nethercott of Hazlewoods Financial Planning LLP on 01242 680000 or e-mail kmn@hazlewoods.co.uk.