This article is brought to you courtesy of CRM & AGM Independent Financial Advisers Limited
Amendments to the ISA and PEP regulations were published on 25 July 2007. The investment limits are to be increased to £7,200 per annum of which a maximum of £3,600 can be invested into a Cash ISA. ISAs will become available indefinitely and these changes will come into force on 6 April 2008.
Bringing PEPs within the ISA wrapper
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PEPs will be included within the ISA wrapper and the rules for the two schemes aligned.
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All PEP accounts will become stocks and shares ISAs and as such PEPs will cease to exist.
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The qualifying investments rules will be combined under the existing ISA rules.
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Changes to the taxation of un-invested cash to be aligned to that currently applicable to ISAs.
Removal of the mini/maxi ISA & Tessa Only ISA distinctions
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Savers will still be able to contribute to cash and stocks and shares components which can be with different providers.
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Up to £3,600 per tax year will be able to go into a cash ISA, whilst up to £7,200 will be able to go into a stocks and shares ISA. The overall subscription limit will be £7,200 per tax year. For example, an investor could subscribe £1,000 cash with one provider and £6,200 stocks and shares with the same or another provider.
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Tessa Only ISAs (TOISAs) will become cash ISAs.
Child Trust Fund accounts to roll over into ISA accounts
Transfers from cash to stocks and shares ISAs
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Cash ISAs, including Tessa Only ISAs (TOISAs), subscribed to in previous years will be able to be transferred in whole or in part to the stocks and shares component of an ISA. Where a transfer includes contributions made in the current year the whole amount of the current year's subscriptions must be transferred.
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Transfers from earlier years will not affect the current year's investment limit. Transfers of the current year's subscriptions will still count towards the contribution limit for that year.
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Transfers from stocks and shares ISAs to cash ISAs will not be permitted.
