Commenting on the ISA changes announced by the Chancellor today, Stuart Davies, Wealth Advisory Director at Deloitte said: The proposed reforms to ISAs are a broadly sensible step to rationalise and simplify the regulations applying to this tax advantaged investment.  Key points are:

• ISAs will be a permanent fixture in the savings landscape, having previously been planned to last until 2010;
• No increase in the annual investment allowance of £7,000, and no commitment for this to be reviewed;
• Effectively abolishing PEPs and bringing existing plans under ISA regulations;
• Allowing Child Trust Fund accounts to roll over into ISAs; and
• Allowing transfers of accumulated cash within ISAs.

The longer term certainty of the existence of ISAs is a welcome step, both for investors and providers, and the ability to transfer maturing proceeds from CTFs into ISAs may also encourage their wider take up.  It would be good to see an increasing allowance for the level of investment, to retain its value as a savings vehicle in the longer term.

The proposal to allow the transfer of accumulated cash will be welcomed by those to whom this applies.

The proposed removal of the distinction between Mini and Maxi ISAs is welcome, but still leaves scope for confusion over what is allowable and the potential for investors to unwittingly breach the regulations when making ISA investments.

The main beneficiaries of ISA tax advantages are higher rate taxpayers.  Higher rate taxpayers with children will be pleased with the proposal on CTFs.  But there is little in these reforms to encourage savings by a majority of individuals.”

Ends

Notes to editors:

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