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Make the most of the new ISAs for your long-term savings

31 March 2008 / by Daniela Gieseler
Despite the current market instability putting money in Individual Savings Accounts (ISAs) is still one of the best available options for people with cash savings, the Tax Incentivised Savings Association (TISA) believes.

Rather than delay decisions about investments any further, TISA urges consumers with spare cash to take advantage of their annual tax-free ISA allowance before the end of the tax year on 5th April 2008.

Moreover, for the tax year 2008/2009 the Government will introduce a number of advantageous changes to the way ISAs work which will simplify the rules and increase the overall flexibility of this type of investment for investors.

Thanks to the simplified rules, from 6th April 2008 there will only be two types of ISAs, the Cash ISA and the Stocks and Shares ISA.

All existing Mini Cash ISAs, "cash" components of Maxi ISAs and TESSA-only ISAs will be reclassified as Cash ISAs, whereas Mini Stocks and Shares ISAS, the "stocks and shares" component of Maxi ISAs and PEPs will be classified as Stocks and Shares ISAs.

In contrast to the previous regime, investors will be able to transfer funds from Cash ISAs into Stocks and Shares ISAs without affecting the current year's allowance – good news for those who want to move their money later this year in more favourable market conditions.

Also, the maximum investment limit has been increased from £7,000 to £7,200 per year, £3,600 of which can be invested in cash.

TISA Director General Tony Vine-Lott remains very optimistic about ISA savings in this tax year: "The best thing about the ISA regime is the choice of investments and cash products - from UK and overseas equities to corporate bonds and gilts which they can invest in directly or through collective investments."

"Regardless of where the market is", he assures, "investors should take confidence that they can make the right choice for their ISA and benefit from tax-incentivised savings."

If you have not yet made the most of your tax free savings allowance, check out the latest ISA deals, and if you are confused about the ISA changes, read our free Guide to ISA changes, which explains the new rules in easy to understand language.

© Fair Investment Company Ltd