ISA reforms confirmed for 2008

isasmurf

The government has today confirmed that the ISA reforms proposed before Christmas will be implemented from 6th April 2008.

The reforms will see the abolition of Mini/Maxi, PEPs merged into ISAs and the ability to transfer cash into Stocks & Shares.

Guardian Unlimited
HMT Press Release

gt94sss2

The government has announced that any reforms to the current ISA regime will come into force from April 2008.

Treasury announcement

I had hoped for this year..

Regards
Sunil

cheerfulcat

Thanks for that, Sunil. It's no surprise that the new rules are to be introduced next year rather than this. Why would Gordon Brown squander a PR opportunity like this while TB is still in charge? Never mind that it might be nice for savers to know where they stand...

zag2me

Great, I didn't even realise you couldn't turn cash into stocks already.

Rhino666

Thanks for that - useful post.

I notice that both attached statements mention the facility to convert cash ISAs into shares. What I would really like to know is - will it be possible to convert the shares ISAs back into cash ? This would be particularly useful if a general stock market crash were forecast.

gt94sss2

Rhino666 wrote:

What I would really like to know is - will it be possible to convert the shares ISAs back into cash ?

No - it would be to useful and cost the Treasury too much money.

Of course, you could leave the cash sitting uninvested in your shares ISA but you would pay 20% tax on the interest..

Regards
Sunil

Geoffo_M

What a joke! Read that link and it appears the main difference will be that you can use the cash component to buy stocks/shares, but NOT use the stocks/shares component for cash isa. By doing this, he is reducing the tax the treasury will lose on cash isas. The stocks/shares isa is meaningless for all but the very large investors anyway. Each year, you receive your capital gains allowance, so it is over and above the £8,300 (or whatever the figure is these days). And he quickly removed making dividends free of tax, which was one of the original advantages of a stocks/shares isa.

All in all, not one that will encourage people to save more.

masonic

Geoffo_M wrote:

Read that link and it appears the main difference will be that you can use the cash component to buy stocks/shares, but NOT use the stocks/shares component for cash isa.

That has always been the case, has it not?

cloud_dog

gt94sss2 wrote:

Of course, you could leave the cash sitting uninvested in your shares ISA but you would pay 20% tax on the interest..
Sunil

At least ISA'a give you that option / flexibility which is what the above poster was looking for.

cheerfulcat

masonic wrote:

That has always been the case, has it not?

No. Under the new rules, you will be able to swap a cash ISA for a S&S one but not the other way about, which is not really very useful. What would have been good is the ability to switch at will between the two but that's not going to happen, for the reason Geoffo gave.

Geoffo wrote:

The stocks/shares isa is meaningless for all but the very large investors anyway. Each year, you receive your capital gains allowance, so it is over and above the £8,300 (or whatever the figure is these days).

The CGT allowance is actually quite mean ( it's £8800 this year ). If you have a good year you can easily breach the limit, even as a smaller investor. I agree about the dividends, though.

Prudent

Sorry for this qusetion, but I found the treasury document hard to follow. How much will I be able to put into a cash isa?