From April 6th 2008, the Government is making some changes to the way Individual Savings Accounts (ISAs) work.
The changes actually simplify tax free saving, but, many people are not even aware the changes are taking place, let alone what the changes are.
In response, Fairinvestment.co.uk has produced a free online Guide to ISA Changes. The guide, which can be downloaded from the website: at http://www.fairinvestment.co.uk/guide_to_isa_changes.aspx
, explains the changes in simple and easy to understand terms.
"From April 6 this year, Mini and Maxi ISAs will be scrapped in favour of Cash ISAs and Stocks and Shares ISAs," explains Sharon Bratley, Chartered Financial Planner at Fairinvestment.co.uk, "which is a much simpler set up."
"Before, you could invest up to £7,000 a year tax free. You could either choose to invest the whole amount into stocks and shares, or up to £3,000 in cash and the rest in stocks and shares.
"To invest the total in stocks and shares, you would have to have a Maxi ISA, to invest just in cash, you would need to open a Mini Cash ISA, and to invest in both, you would have to ether have two ISAs; a Mini Cash and a Mini Stocks and Shares, or a Maxi ISA in which the investment was split between the two."
"You could not pay into a Mini ISA and a Maxi ISA in the same tax year."
"Thankfully, this has been massively simplified. Now there are only two types of ISA – Cash ISAs and Stocks and Shares ISAs. The tax free limit has been raised to £7,200 overall, £3,600 of which can be invested in cash.
"From April 6th, existing ISAs will be automatically reclassified under the new rules, and you may pay into both a Cash ISA and a Stocks and Shares ISA during one tax year, as long as your combined investment does not exceed the £7,200 limit."
Ms Bratley says she welcomes the changes, because she thinks it will make tax free savings a lot easier to understand.
"Currently, the rules surrounding tax free savings are overly complicated. This shift to having just two types of ISA is a much better approach. It offers simplicity to savers and should give people more confidence when shopping around for the best ISA deals."
Download the FREE Guide to ISA Changes