The rules relating to Individual Savings Accounts (ISAs) have been revised substantially since 6 April. The changes are aimed at simplifying what had turned into a rather complex regime.
The good news is that ISAs continue to remain available and continue to remain tax free. The maximum yearly investment you can make into an ISA is £7,200 of which a maximum of £3,600 can be in cash and if you choose to split your cash and share-based investments between two different ISA providers, that is allowed. One of the big improvements which has been made is the ability to switch investments from a cash ISA to a stocks and shares ISA during the tax year without affecting the allowance. However, holdings of stocks and shares ISAs cannot be switched to cash ISAs.
As part of this process, the old-style Personal Equity Plans (better known as PEPs) have now become ISAs.
A cash ISA can be taken out by anyone over the age of 16, whereas a share-based ISA is only available to people of 18 years old or more. A child trust fund can be transferred into an ISA on maturity without loss of the tax advantages.
The best news of all is that ISAs are to continue indefinitely – they were originally scheduled to cease in 2010.