The main effect of the changes is to:
- Bring PEPs within the ISA wrapper, this means all Personal Equity Plans (PEPs) automatically
become stocks and shares ISAs.
- Remove the Mini/Maxi distinction to simplify ISAs.
- Allow each individual to subscribe to a total of £7,200 with up to £3,600 in cash
with one provider and the rest into stocks and shares with the same or a different
provider.
- Allow transfers from existing cash component ISAs into stocks and shares component
in whole for current tax years and part or whole of previous tax years without affecting
your ISA allowance.
- Make ISAs available indefinitely - there is no set end date for ISAs!
Subscription Limits
Every adult has an annual ISA investment allowance of £7,200. Up to £3,600 of that
allowance can be saved in cash with one provider. The remainder of the £7,200 can
be invested in stocks and shares with either the same or another provider.
For example:-
An individual saves £1,200 in a cash ISA at the beginning of the tax year. In the
same year they could save up to another £6,000 in ISAs. This could be up to £2,400
in the same cash ISA or up to £6,000 in a stocks and shares ISA with either the
same or another provider, or a combination of both.
Transferring money saved in previous tax years from cash ISAs into stocks and shares
ISAs
Savers are able to transfer some or all of the money saved in previous tax years
from cash ISAs to stocks and shares ISAs without affecting their annual ISA investment
allowance.
For example:-
An individual has a total of £9,000 saved in cash ISAs from previous tax years.
They plan to invest their full current year ISA annual investment allowance of £7,200
in a stocks and shares ISA. In the same tax year they could also transfer some or
all of the £9,000 held in cash ISAs in to any stocks and shares ISA(s).
Transferring money saved in the current tax year from cash ISAs into stocks and
shares ISAs
Savers are also able to transfer money saved in the current tax year in cash ISAs
to stocks and shares ISAs. Such transfers must be the whole amount saved in that
tax year in that cash ISA up to the day of the transfer. Once money saved in the
current tax year is transferred from a cash ISA to a stocks and shares ISA, it is
treated as if it had been invested directly into stocks and shares ISA in that tax
year. The saver is able to then still save up to the full remaining balance of their
£7,200 annual ISA investment allowance in ISAs in that tax year, including up to
£3,600 in a cash ISA.
For example:-
An individual saves £3,600 in a cash ISA at the beginning of a tax year. They could
transfer the whole £3,600 to a stocks and shares ISA. The individual could then
still save up to another £3,600 into their ISAs, either the same stocks and shares
ISA, a cash ISA or a combination of both.