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Last Updated: Wednesday, 21 March 2007, 16:01 GMT
New ISA limits announced for 2008
Treasury minister Ed Balls
The new, simpler, ISA structure was first unveiled by Ed Balls last year
Higher limits for annual investment in individual savings accounts (ISAs) will come into force from 6 April 2008.

People will be allowed to save up to 3,600 in a cash ISA and up to 7,200 in a stocks and shares ISA, within an overall annual savings limit of 7,200.

But this means some savers will have a lower investment ceiling for their stocks and shares than they do now.

ISAs are held by more than 16 million individual investors, with policies worth more than 180bn.

"It is good to see the Government recognising the importance of ISAs in the UK savings market," said Richard Saunders of the Investment Management Association.

"But a 3% increase after nine years is not much and we will look for more in the future," he added.

New structure

The simplified structure for ISAs that will come into force in 2008 was announced by the government last year.

Currently, both the structure and limits for ISAs are different to those that will apply from April 2008.

Currently someone can invest

  • 3,000 each tax year in a cash mini ISA
  • 4,000 each tax year in a stocks and shares mini ISA
  • Or 7,000 each tax year in a maxi ISA, of which up to 3,000 may be in cash.

But the new, raised, cash limit of 3,600 means that someone who chooses to save the maximum cash each year will only be able to invest 3,600 in stocks and shares - less than the current limit of 4,000 a year.

"The changes to the ISA rules will not come in until 6 April 2008 which should give consumers and the industry time to adapt to the new rules," said Anne Young, Technical Director at Scottish Widows.

"In particular the removal of the mini/maxi distinction should help members of the public better understand the ISA rules," she said.

ISAs have been very popular since they were first introduced in 1999.

Their attraction is that any money accrued within them is free of either income tax or capital gains tax.

Last December the government also announced that any cash saved so far in ISAs could eventually be rolled forward into a new stocks and shares ISA, without infringing that year's contribution limit.

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