ISA and PEP Changes

For those of you old enough to remember Personal Equity Plans (PEPS) we now have some changes.

From 6 April 2008, the Government are implementing a series of changes to the way that Individual Savings Accounts (ISAs) and Personal Equity Plans (PEPs) work.

The key changes are as follows:

New Subscription Limits
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 total investment of £7,200 with all providers.
Mini and Maxi ISA
In an effort to simplify the structure of ISAs, the terms Mini ISA and Maxi ISA will disappear from the 6 April 2008. From that date, you may subscribe either to a Cash ISA or a Stocks & Shares ISA.
PEPs become ISAs

All existing PEP accounts will automatically become Stocks & Shares ISAs on 6 April 2008, and as such, become subject to the ISA rules. You will still be able to hold the same investments within your account, and because the PEP has converted into a Stocks & Shares ISA, the saver has the option to subscribe to the account, if they so wish.
Transfer of Cash ISA to Stocks %26 Shares ISA

When the new changes come into affect, 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 cash from Stocks & Shares ISAs to Cash ISAs.

How does it benefit me?

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 more 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.
Killik %26 Co will pay any and all of your exit charges

Many people have accumulated PEPs and ISAs over the years – some with high charges, some of which have performed averagely or even poorly. For advice in this area or a review of you PEP’s and ISA please contact me.

Richard Smith

The Finance Zone 0845 226 9106

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