From 6 April 2008 the structure of ISAs has changed. The aim behind these changes is to make investing easier and provide you, the investor, with more certainty and flexibility.
What does this mean for you?
The main changes are:
- The removal of the distinction between Mini and Maxi ISAs. All ISAs have been reclassified as either a Cash ISA or a Stocks and Shares ISA, and both types will be available indefinitely, with no set end date.
- All PEPs have been reclassified as Stocks and Shares ISAs and are subject to the ISA rules.
- Annual subscription limit raised from £7,000 to £7,200.
- Investors may use their entire annual allowance to invest in a single Stocks and Shares ISA. Alternatively, investors can save up to £3,600 of their annual allowance in one Cash ISA and invest the remainder of the £7,200 in one Stocks and Shares ISA.
- Your Cash ISA and your Stocks and Shares ISA can be with the same or different providers.
- Under the new rules, you can transfer some or all of the money you invested in Cash ISAs over previous years into a Stocks and Shares ISA, without affecting your annual subscription limit, but not vice versa.
The benefits, however, remain the same.
ISAs allow you to protect some of your investments from tax. These investments can be cash only or include a range of financial products such as bonds and shares. Please note you can only invest in a Stocks and Shares ISA with M&G.
ISAs create a fence that the taxman can’t get over, so whatever you put inside the fence won’t be liable for income or capital gains tax.
If you are a UK resident (or ordinarily resident in the UK for tax purposes) and aged over 18 years, you’re entitled to invest in an ISA.
