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Time running out for ISA merger

05 April 2005
Time is running out to make a decision about insurance-based and stocks-and-shares ISAs, both of which are to merge tomorrow with the start of the new tax year into one £4,000 allowance.

If people who hold both types of account do not make a decision by tomorrow, only the first ISA paid into will automatically continue to exist.

Patrick Connolly, an independent financial adviser with John Scott & Partners, advised keeping the stocks-and-shares option open on BBC Radio Four's Money Box programme on Saturday.

He asserted that the with-profits investment offered by the insurance option is likely to provide less long-term gain.

"If you look at the with-profits sector as a whole, the asset allocation of the funds, the mix of underlying assets has changed entirely," Mr Connolly told listeners.

He added: "They are largely invested in fixed interest now. Bonus rates have come down, and very often there are fairly hefty penalties if you want to get your hands on your money."

Investors are currently allowed to invest up to £3000 in stocks and shares mini-ISAs and £1000 in the insurance version. The merger will see the distinction between the two erased.

Click here to find out more about ISA investment.
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