ISAs here to stay

cheerfulcat

...but not the other way about, it seems.

david78

It would be too expensive to allow transfers from share ISAs to cash ISAs. I think this cash-to-shares facility might be helpful at some time in the future. Meanwhile it looks sensible to build as big a cash ISA pot as possible. You can always diversify later.

Reading that article it seems the annual limits will be £7000 with up to £3000 in cash and the rest in shares/funds. And you can use one or two ISA managers. So you could put £2000 in cash and £5000 in shares if you wanted.

Presumably this doesn't come in till 2010. Shame if the £7000 allowance doesn't rise though.

isasmurf

Announcement in full - Speech by Ed Balls

23. For adults, the Individual Savings Account is the Government's primary vehicle for tax-advantaged saving outside pensions. The conclusion of our internal review is that ISAs have been successful in their aim of extending the principle of TESSAs and PEPs to promote saving more widely throughout the population.

24. Over 16 million people - more than one in three adults - now have an ISA - twice as many as held TESSAs and PEPs in 1999. And the proportion of savers with an ISA among low-income groups and the young is much higher compared with TESSAs and PEPs.

25. The Government is keen to build on the success of ISAs. As I announced earlier this month, we will make the ISA a permanent feature of the savings landscape. This will provide stability for savers, certainty for the industry and a firm platform on which to promote saving in the future.

26. I also announced that the overall annual contribution limit would continue to be at least £7,000 for each individual. Obviously any decisions on limits are a matter for Budgets.

27. In addition to clarifying the future of ISAs, I announced a number of reforms designed to simplify the ISA regime and increase its flexibility for savers. I said that I would consult further on these points and today I can set out more detail on these proposals:
I have announced that we will bring PEP schemes within the ISA wrapper. As ISAs are now here to stay, and the number of PEPs in existence will reduce over time, it makes sense to make this change, which many in the industry have requested. This will rationalise the savings landscape and increase the flexibility for savers to manage their funds more effectively. And it will lead to a reduction in administrative burdens for providers.
Whilst this change will be compulsory - the PEP label will cease to exist - we do not propose to force providers who have clients with both PEPs and ISAs to amalgamate those accounts - this will be a matter for each provider. I am conscious that there will be an impact from the changeover and we will work with providers to minimise these burdens.
I have also announced that we will remove the Mini/Maxi distinction within the ISA, something I know that many in the industry have called for. Instead, we will have just two components - cash ISAs and stocks & shares ISAs. This will simplify the regime, and provide greater flexibility and choice for savers.
I know that there have been concerns over how the new regime will operate, so I will clarify matters. We will continue to allow individuals to hold these components with either the same or different providers. And, as under the current regime, there will still be different investment limits for cash and stocks & shares within the £7,000 overall annual allowance.
And in keeping with our lifecycle approach, I have announced that we will allow Child Trust Fund accounts to rollover into the ISA when they start to mature from 2020 onwards.
There is one further announcement that I would like to make today. While maintaining the general restriction on transfers between the ISA components, we are proposing to allow transfers in one particular circumstance. Individuals with funds saved in the cash component of ISAs from previous years will be able to transfer those funds into the stocks & shares component without affecting their annual investment limit. By removing this restriction, our aim is to further promote share ownership by encouraging savers to diversify their assets and benefit from the potentially higher returns offered by stocks and shares over the long run.

28. More details on these proposals will be provided in the Pre-Budget Report next month. We will seek views from providers and other stakeholders on the best way to implement these reforms and when it would be practicable to do so.

dunstonh

26. I also announced that the overall annual contribution limit would continue to be at least £7,000 for each individual. Obviously any decisions on limits are a matter for Budgets.

And watch the budget before the election announce that the ISA limits are being increased.

Investment ISAs (as they should really be known as) cost the treasury less than Cash ISAs. Plus they are of more benefit to the economy. So the one way transfer from Cash to Stocks and Shares makes monetary sense at Govt level.

stphnstevey

I have just heard on the Working Lunch on BBC2 that you can now convert your Cash ISA's to S&S ISA's with no loss of your ISA allowance for that year.

I think this means if you had built up £9000 in cash ISA's from previous years, you could transfer this into a S&S ISA, much like you could transfer it into another cash ISA.

Does anyone know anymore or know if you could transfer a S&S ISA back to a cash ISA if you wanted to?

YorkshireBoy

http://news.bbc.co.uk/1/hi/business/6178298.stm

cheerfulcat

stphnstevey wrote:

Does anyone know anymore or know if you could transfer a S&S ISA back to a cash ISA if you wanted to?

No, it's one-way only.

oldfella

of course you would loose all the long-term tax advantage if you move it - dividends from shares are paid net of tax

Mike

Primrose

Now that the Treasury have announced that ISA's will continue after 2009 with the rules being reviewed to remove some of the distinctions beween Mini & Maxi ISAs, do you think they will permit the £7000 annual allowance to be used in full as CASH in future?

ReportInvestor

The balance of opinion on the site is no as it would cost the Treasury far too much.

With share ISAs a basic rate tax payer doesn't get an income benefit since (s)he can't reclaim an equity dividend tax credit and so the Treasury doesn't lose a lot with these.

Unless the investor chooses Corporate Bonds or PIBs.