Changes to PEPs and ISAs

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Changes to PEP and ISA investing from the 2008 / 09 Tax Year

From 6 April 2008 the Government is making a number of changes to the way PEPs (Personal Equity Plans) and ISAs (Individual Savings Accounts) work.

Why is this happening?

These changes are designed to deliver certainty, simplicity and flexibility for investors.

What are the key changes?

1. PEPs will cease to exist in their current form and will become ISAs.
   All PEP accounts will automatically become stocks and shares ISAs on 6 April 2008 and become subject to ISA rules.
2. ISAs will be available indefinitely.
3. There will be a new ISA structure and higher contribution limits.
   • The overall ISA annual contribution limit has increased.
     From 6 April 2008 every adult has an annual ISA investment allowance of £7,200 – of which up to £3,600 can be held in a cash ISA and the balance, or full amount, in a stocks and shares ISA. The SIT ISA is a stocks and shares ISA.
   • The government has abolished the distinction between Mini and Maxi ISAs.
     ISAs will be re-designated simply as cash ISAs or stocks and shares ISAs.
   • Money saved in cash ISAs can be transferred into stocks and shares ISAs. This applies to previous tax years as well as to the current tax year.
   • Money held in a Child Trust Fund (CTF) account can be rolled over into an ISA once the child reaches 18.