New ISA Rules Explained
April 8th, 2008
Since the start of the new tax year on 6th April 2008, new rules have been introduced that change the allowances and some of the terms of your previous years’ ISAs.
Here is a checklist of the changes:
- Your annual allowance has been raised to £7,200 – an increase of £200.
- There is no longer a separation of a mini or maxi ISA. Instead, you can now invest the full £7,200 in stocks & shares, or up to £3,600 in cash and £3,600 in equities. If you only wish to invest a smaller amount in cash, for instance, £1,000, the remaining £6,200 of your allowance can be invested in equities.
- All of your TESSA-only ISAs (TOISAS) have automatically become cash ISAs.
- All of your Personal Equity Plan (PEP) holdings have automatically become stocks & shares ISAs.
- You are now able to transfer money you have saved in cash ISAs into a stocks and shares ISA.
Despite these changes, ISAs remain free of income and capital gains tax. This means that for most people, if you have money to invest, putting it in an ISA makes perfect sense.
If you have any stock & shares ISAs you don’t already hold through Torquil Clark Investments, you could earn 0.5% cashback by bringing them on to our Fund Supermarket. To speak to a member of our Investments Team call 0800 294 7221.
Some useful Questions & Answers
I don’t understand the changes to my allowances, can you provide more detail?
The government has basically increased your total ISA allowance by £200. This means you can now put £7,200 into an ISA every tax year. Within that £7,200, you can put a maximum of £3,600 into cash. However, this will mean you can only invest £3,600 into an equity ISA.
The good news is that if you only wish to put £1,000 in to cash, you can put the remaining £6,200 of your allowance into stocks & shares.
Can you explain the changes to my PEP accounts?
All of your PEP accounts will now become stocks & shares ISAs. This change does not affect any of your holdings and you will still pay no income or capital gains tax.
How much of my cash ISAs can I transfer in to a stocks & shares ISA?
You can transfer as much of your cash ISAs into a Stocks & shares ISA as you want, even all of the money you hold in cash ISAs. However, you are not currently able to transfer from an equity-based ISA into a cash one.
Can I transfer the money I have in Tessa-only ISAs (TOISAs) into a stocks & shares ISA?
As TOISAs are now classed as cash ISAs, you can transfer them into a stocks and shares ISA.
How do I transfer the money I have in my cash ISAs in to a stocks & shares ISA?
Call a member of our Investments Team on 0800 294 7221, who will go through the simple process with you. Do not withdraw the cash from your ISA, as you will lose the ISA status of that money. Let us run through the process with you and transfer the money between providers.
Author: Philippa Gee
April 8th, 2008
Category: Investments.
