The 2008 Budget saw the Chancellor raise the Maxi ISA limit to £7,200, and the Cash Mini ISA limit pumped up to £3,600 in a bid to encourage people to invest more money into tax free savings schemes.

The new rules for ISAs, which come into effect on April 6, will see investors able to save more overall, but some savers will have a lower investment ceiling for their stocks and shares than they do now. Currently, someone can invest up to £3,000 each tax year in a cash mini, £4,000 each year in a stocks and shares mini or a combined total of £7,000 of which £3,000 may be cash.

The new limits of £3,600 mean that someone who chooses to save the maximum cash each year will only be able to invest £3,600 in stocks and shares, which is down from the current £4,000 limit. Although whilst this limit decreases, the move makes for easier investments; one limit for investments of either kind, and another limit for a combined investment plan.

Anne Young, Technical Director at Scottish Widows says that “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… In particular the removal of the mini/maxi distinction should help members of the public better understand the ISA rules.”

ISAs were first introduced in 1999, and are among the most popular way for investors to begin saving, due to the fact that any interest accumulated within the set investment limits is exempt from both income tax and capital gains tax.

This entry was posted on Tuesday, March 25th, 2008 at 10:28 am and is filed under Banking, Investing, Savings. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.