December 2006

Reforms to ISA and PEP Schemes

The Individual Savings Account (ISA) is a tax exempt savings account which allows individuals to invest up to £7,000 per annum. Income from these accounts is tax free.

Speaking at the Annual Conference of the PEP and ISA Managers’ Association (PIMA) in London recently, the Economic Secretary to the Treasury, Ed Balls, announced the conclusion of the Treasury’s review of the ISA.

He said ‘I can announce that we will make the ISA a permanent feature of the savings landscape. This open-ended commitment to the ISA will provide stability for savers and certainty for the industry – all of you who provide ISA products. It is a crucial development in the Government’s savings strategy and will give us a firm platform on which to promote saving in the future. In addition, the Pre-Budget Report will confirm that the overall annual contribution limit will continue to be at least £7,000 for each individual’.

He went on to announce that the intention is to remove the mini/maxi account distinctions which currently apply to ISAs. He also announced that Personal Equity Plan schemes (PEP) are to be brought within the ‘ISA wrapper’. The detail to the changes is to be made in the Pre-Budget Report.

Internet link:

PIMA press release