by Matthew Adams

Created on: October 06, 2008   Last Updated: May 16, 2010

The Isa is an individual savings account, offered by UK banks and building societies. They are tax-free investments, either in savings or shares. Now, they have undergone review and HM Treasury has made some necessary changes to them.

There have been a few changes to Isa (Individual Savings Accounts) in 2008. These changes have been for the better. To begin with, the most obvious change is that they are now here to stay!

Originally, Individual Savings Accounts were due to stop in 2010, but now it has been decided to keep them indefinitely. As such, the tax free Individual Savings Account can be invested in for the long term. This is probably the best change for Isas. However, there are other positive developments.

The distinction between Maxi and Mini Isas has now also been removed. As such, they are now referred to as Cash Isa, or the alternative Stocks and Share Isa.

Cash Isa accounts only allowed for a maximum annual deposit of 3,000; this has now been increased by 600, to 3,600. So, more can be invested in Cash Isas and more interest accumulated annually.

Share Isa limits has also been increased. Originally 7000, it has now been increased to 7,200. So, more can be invested in shares also. Although, not a great deal more admittedly, and the increase to the cash Isa is better.

For those with Child Trust Funds, there are also interesting changes. Isas can now be combined with Child Trust Funds, once the child has turned 18. As such, the Trust Fund can be rolled into an Isa to maximize savings returns.

Another notable change is that it is now possible to convert Cash Isa into a Share Isa. However, it is not possible to do the reverse. This will give them extra flexibility, and is good for investors.

PEPs (Personal Equity Plans) have also been moved into the Isa wrapper. They have been renamed, and are simply referred to as Share Isas. As such, the PEP has become extinct with all PEPs merged into the Isa. All changes mentioned here are applicable to them.

All the changes made can be considered positive, and have now taken effect. The changes, with the exception of the first, are admittedly fairly minor but still serve to enhance the Cash and Share Isas. Certainly, Individual Savings Accounts can now be considered very good investments, and should certainly be considered for better rates of interest. They can be researched at various branches, or elsewhere.

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