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Changes to ISA rules and regulations from 06 April 2008

General ISA Questions

What are my ISA investment options now?

  • From April 2008 you will be able to invest in one cash and one Stocks and Shares ISA each tax year.
  • The annual ISA investment allowance has now risen to £7,200 per tax year. Up to £3,600 of that allowance can be saved in cash with one provider. The remainder of the £7,200 can be invested in a Stocks and Shares ISA with either the same or another provider, or you can invest the full £7,200 in a Stocks and Shares ISA.
  • For example, you can chose to save £1,000 in a cash ISA with one provider and £6,200 in a Stocks and Shares ISA with the same or another provider.

What happens to my existing ISAs?

  • Mini Cash ISAs, TOISAs and the cash component of a Maxi ISA will all be reclassified as 'Cash ISAs'.
  • Mini Stocks and Shares ISAs and the Stocks and Shares component of a Maxi ISA will be reclassified as 'Stocks and Shares ISAs'.

Will I have to sign any new forms if I want to continue paying into my ISA?

No as long as you:

  • saved in that ISA in the previous tax year
  • signed a continuous application form for that ISA, and
  • have not already saved in another ISA of the same type (cash or stocks and shares) during the current tax year.

However, if you transfer your ISA to a new provider, you may be asked to complete a new ISA application form.

How Much can I transfer from my cash ISA to a stocks and shares ISA?

  • You can transfer some or all of the money you have saved in previous tax years without affecting your annual ISA investment allowance.
  • Savers are also able to transfer money saved in the current tax year. Such transfers must be the whole amount saved in that tax year in that cash ISA up to the day of the transfer.
  • These transfers are subject to the terms and conditions.

I have transferred all of my current year cash subscription to a Stocks and Shares ISA, can I make any further payments to my ISA this tax year?

  • Yes, provided you haven't already used up your annual ISA investment allowance of £7,200.
  • When you transfer your current year Cash ISA to a Stocks and Shares ISA it is as if that Cash ISA had never existed. Any money you saved up to the date of transfer will be treated as if you had invested that money directly to the Stocks and Shares ISA.
  • For example, if you had saved £2,000 in a Cash ISA and then transferred it to a Stocks and Shares ISA you would be able to make further investments totalling £5,200 in the year. You can either invest all of the £5,200 in a Stocks and Shares ISA or you could save up to £3,600 in a cash ISA or a combination of both.

How do I transfer the money in my cash ISA to a Stocks and Shares ISA?

  • Exactly the same way as you would transfer your ISA to another provider.
  • You will need to select the Stocks and Shares ISA provider that you want to have your ISA with. This can be your existing provider if they offer a Stocks and Shares ISA, or you can appoint a new provider.
  • You then ask the new provider to arrange the transfer.
  • You must not withdraw the money and invest it in your Stocks and Shares ISA yourself, as it will count against your annual ISA investment allowance.

Can I transfer money I have invested in my Stocks and Shares ISA to a Cash ISA?

  • No the ISA rules are being changed to allow the transfer of monies saved in a Cash ISA to a Stocks and Shares ISA but not vice versa.

What is an ISA?

  • An individual savings account. It is a tax-efficient savings plan that allows people to invest in a range of effective ways - cash, and equity / stockmarket instruments (shares, unit trusts, gilts etc).
  • There is no requirement to lock the money away for a long term.
  • Any interest / profit will be free of tax.

Who can invest in an ISA?

To invest in an Individual Savings Account, you must

  • Be resident and ordinarily resident in the UK for tax purposes or, if not so resident, either performing duties, which are treated as being performed in the UK or be married to, or in a civil partnership with, a person who performs such duties.
  • Be 16 years or over for a Cash ISA
  • Be 18 years or over for a Stocks and Shares ISA
  • If investing in a ISA, you must not have subscribed to another ISA of the same type in the same tax year.

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How does it work?

With effect from 6 April the two different types of ISA available will be - the Cash and the Stocks and Shares

  • The Stocks and Shares ISA can hold the different types of investment if you wish - cash and equity stocks and shares up to a maximum value of £7,200.
  • The Cash ISA allows cash deposits up to a maximum value of £3,600 each tax year.

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How much can I invest in an ISA this tax year?

This tax year runs from 06 April 2008 to 05 April 2009.

The maximum an individual can invest in ISAs in a tax year is currently £7,200. This investment could be in one Cash ISA and/or a Stocks and Shares ISA with either the same or another provider.

ISA Component Total Investment
Stocks & Shares* £7,200
Cash* £3,600

With effect from 6 April 2008 the annual investment allowance will be raised to £7,200 and will be broken down as follows:

  • Up to £3,600 of that allowance can be saved in cash with one provider
  • The remaining balance up to the £7,200 limit can be re-invested into a stocks and shares ISA with either the same or another provider. Or alternatively £7,200 can be invested into this component.

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How many can I have?

With an ISA you will be able to save up to £7,200 (with effect from 6 April 2008) each year and not pay tax on the interest you receive from your investment.

An ISA can be made up of an investment in cash, or longer term investments like stocks and shares. In each financial year you can invest £3,600 in one cash ISA, and invest a further £3,600 in a stocks and shares ISA. You can invest in both a cash ISA and stocks and shares ISA in the same tax year.

Cash ISA

You can only invest in one cash ISA each tax year. With effect from 6 April 2008 you will be able to invest £3,600 in a cash ISA.

You cannot invest in more than one cash ISA in the same tax year.

Stocks and Shares ISA

You can only invest in one stocks and shares ISA each tax year. With effect from 6 April 2008 you will be able to invest up £7,200 in a stocks and shares ISA providing that you have not invested in a Cash ISA in the same tax year. You can hold a stocks and shares ISA and a cash ISA in the same tax year providing the combined total of your cash ISA and stocks and shares ISA does not exceed £7,200.

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How do I apply for an ISA?

Remember - if you're applying for an ISA for a specific tax year, we must receive your completed application form (online or offline) and opening deposit by 5th April to qualify for the tax year.

Step 1

You can apply by contacting our Savings and Investment postal team on 0845 602 2828.

Step 2

Just like all financial organisation we're obliged by law to confirm the identity of every applicant. We'll advise you if we need you to provide documentation that clearly identifies or re-confirms who you are.

Step 3

Please send us your completed application along with your deposit - this can be a cheque or transferred from an existing Birmingham Midshires account to:

Birmingham Midshires
PO Box 81
Pendeford Business Park
Wobaston Road
Wolverhampton WV9 5HZ

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I've applied for an ISA - what happens next?

We'll now begin to process your application, the next step for yourself is as follows.

If you're investing by cheque, please make the cheque payable to yourself i.e Mr A Smith, quote the account number on the reverse of the cheque and post to Birmingham Midshires to the address as follows:

Birmingham Midshires
PO Box 81
Pendeford Business Park
Wobaston Road
Wolverhampton WV9 5HZ

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