PEPs and ISA reforms - 6 th April 2008

From 6 th April 2008, new legislation will be introduced that will change the way that Individual Savings Accounts (ISAs) and Personal Equity Plans (PEPs) work. The key changes can be summarised as follows:

These have been increased. In the new tax year you will be able to subscribe up to £3,600 to a Cash ISA (current limit £3,000) and £7,200 to a Stocks & Shares ISA (current limit £7,000), subject to an overall investment of £7,200 with all providers. For example, you can choose to save £1,000 in a Cash ISA with one provider and £6,200 in Stocks & Shares ISA with a different provider.

In an effort to simplify the structure of ISAs, the terms Mini ISA and Maxi ISA will disappear from 6 April 2008. From that date, you may subscribe either to a Cash ISA or a Stocks & Shares ISA.

All existing PEPs will automatically become Stocks & Shares ISA's on 6 April 2008, and as such, become subject to ISA rules.

When the new changes come into effect, savers will also be able to transfer some or all of the money saved in Cash ISAs to Stocks & Shares ISAs. This will not affect your annual ISA subscription allowance but please note that the rules do not allow for the transfer of Stocks & Shares ISAs to Cash ISAs.

Investors will benefit from these reforms in many ways. The structure of ISAs has been simplified to avoid confusion, increased subscription limits mean you can now save money into the ISA 'wrapper' (and protect it from the tax man!) and the transfer of Cash ISAs to Stocks & Shares ISAs means you can now unlock the potential of savings set aside in the building society over the last few years.

ISAs will remain a "use it or lose it" allowance. If you will have any allowances available for the coming tax year and intend to make an investment, you will need to act quickly.

If you have a range of existing PEPs and ISAs and any collective investments, you should also consider the use of a platform or WRAP which will improve and simplify the way in which you can access info rmation about your investments.

For more details contact your usual Taylor Patterson advisor or complete the online contact form.