Maestro Overview

ARE YOU STILL IN THE DARK ON ISAS?

ISA rules are changing from 6 April 2008

TagThe annual ISA investment allowance will be raised to £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 a different provider.

TagISA savers will be able to invest in two separate ISAs each tax year; a cash ISA and a stocks and shares ISA. Mini and maxi ISAs will no longer exist.

TagMini cash ISAs, TESSA-only ISAs (TOISAs) and the cash component of a maxi ISA will automatically become cash ISAs.

TagMini stocks and shares ISAs and the stocks and shares component of a maxi ISA will automatically become stocks and shares ISAs.

TagAll Personal Equity Plans (PEPs) will automatically become stocks and shares ISAs

TagISA savers will be able to transfer money saved in their cash ISA to their stocks and shares ISA

Your questions answered

Q. What are my ISA investment options now?

Q. What happens to my PEP?

Q. What happens to my existing ISAs?

Q. Will I have to sign any new forms if I want to continue paying in to my ISA?

Q. Will I have to merge my PEP investments with my stocks and shares ISA investments?

Q. So from now on how will the interest I receive from any un-invested cash held in my former PEP be treated?

Q. How much can I transfer from my cash ISA to a stocks and shares ISA?

Q. I have transferred part/all of my current year cash subscription to a stocks and shares ISA, can I make any further payments to my ISA this tax year?

Q. How do I transfer the money in my cash ISA to a stocks and shares ISA?

Q. Can I also transfer the monies I hold in my TOISA to a stocks and shares ISA ?

Q. Can I transfer the monies I have invested in my stocks and shares ISA to a cash ISA?

Q. Can I still transfer my cash or stocks and shares ISA held with one provider to another provider?

Q. Will the qualifying investments of the ISA be changed?


Q. What are my ISA investment options now?

A. From April 2008 you will be able to invest in one cash and one stocks and shares ISA each tax year.

The annual ISA investment allowance has now risen to £7,200 per tax year. 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 a stocks and shares ISA with either the same or another provider.

For example, you can chose to save £1,000 in a cash ISA with one provider and £6,200 in a stocks and shares ISA with a different provider.

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Q. What happens to my PEP?

A. All PEP accounts will automatically become a stocks and shares ISA. You will be able to invest in this re-labelled PEP,which is now a stocks and shares ISA, as long as you haven’t subscribed to another stocks and shares ISA during the current tax year.

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Q. What happens to my existing ISAs?

A. Mini cash ISAs, TOISAs and the cash component of a maxi ISA will all be reclassified as ‘cash ISAs’.

Mini stocks and shares ISAs and the stocks and shares component of a maxi ISA will be reclassified as ‘stocks and shares ISAs’.

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Q. Will I have to sign any new forms if I want to continue paying in to my ISA?

A. No - as long as you:

Tagsaved in that ISA in the previous tax year

Tagsigned a continuous application form for that ISA, and

Taghave not already saved in another ISA of the same type (cash or stocks and shares) during the current tax year.

However, if you transfer your ISA to a new provider, you did not sign a continuous application form, or you did not save in your ISA in the previous tax year then you will have to complete a new ISA application form.

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Q. Will I have to merge my PEP investments with my stocks and shares ISA investments?

A. No, your existing PEP will just become a stocks and shares ISA, but you can merge the two if you so wish. The changes align the rules for the two schemes.

You will now be able to invest in the full range of wider qualifying ISA investments, including insurance and stakeholder products.

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Q. So from now on how will the interest I receive from any un-invested cash held in my former PEP be treated?

A. The ISA manager must deduct a flat rate 20 per cent charge and pay it to HM Revenue & Customs. This rule has always applied to stocks and shares ISAs and will now apply to interest earned on uninvested cash formerly held in PEPs.

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Q. How much can I transfer from my cash ISA to a stocks and shares ISA?

A. You can transfer some or all of the money you have saved in previous tax years without affecting your annual ISA investment allowance.

Savers are also able to transfer money saved in the current tax year. Such transfers must be the whole amount saved in that tax year in that cash ISA up to the day of the transfer.

These transfers are subject to the terms and conditions of your ISA providers.

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Q. I have transferred part/all of my current year cash subscription to a stocks and shares ISA, can I make any further payments to my ISA this tax year?

A. Yes – provided you haven’t already used up your annual ISA investment allowance of £7,200.

When you transfer your current year cash ISA to a stocks and shares ISA it is as if that cash ISA had never existed. Any money you saved up to the date of transfer will be treated as if you had invested that money directly to the stocks and shares ISA.

For example, if you had saved £2,000 in a cash ISA and then transferred it to a stocks and shares ISA you would be able to make further investments totalling £5,200 in the year. You can either invest all of the £5,200 in a stocks and shares ISA or you could save up to £3,600 in a cash ISA or a combination of both.

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Q. How do I transfer the money in my cash ISA to a stocks and shares ISA?

A. Exactly the same way as you would transfer your ISA to another provider.

You will need to select the stocks and shares ISA provider that you want to have your ISA with. This can be your existing provider if they offer a stocks and shares ISA, or you can appoint a new provider.

You then ask the new provider to arrange the transfer.

You must not withdraw the money and invest it in your stocks and shares ISA yourself, as it will count against your annual ISA investment allowance.

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Q. Can I also transfer the monies I hold in my TOISA to a stocks and shares ISA ?

A. Yes you can. A TOISA is a cash ISA.

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Q. Can I transfer the monies I have invested in my stocks and shares ISA to a cash ISA?

A. No. The ISA rules are being changed to allow the transfer of monies saved in a cash ISA to a stocks and shares ISA but not vice versa.

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Q. Can I still transfer my cash or stocks and shares ISA held with one provider to another provider?

A. Yes. The rules on transferring like-for-like ISAs between providers are not changing.

For example, you can still transfer your cash ISA held with one provider to a different cash ISA provider, without affecting your annual ISA investment allowance.

You must ask the new cash ISA provider to arrange the transfer.

You must not withdraw the money and invest it in your cash ISA yourself, as it will count against your annual ISA investment allowance.

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Q. Will the qualifying investments of the ISA be changed?

A. No. The qualifying investments rules of the ISA will not change.

But former PEP investments will now be able to invest in the full range of wider qualifying ISA investments, including insurance and stakeholder products.

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