Government unveils changes to Isa structure

The government has announced changes to the individual savings account (Isa) structure as part of an attempt to make the tax break scheme appear more simplistic and attractive to investors.

From April 6th 2008, savers will be allowed to invest up to £7,200 each tax year in an Isa - £3,600 of which can be held in cash, with the remainder to be devoted to stocks and shares.

As a result, the distinction between mini and maxi Isas has been dispensed with.

Meanwhile, all personal equity plans (Peps) will by definition become stocks and shares Isas.

Commenting on the changes, economic secretary to the treasury Kitty Ussher said: "The Isa has been successful in helping more people to save in a tax-efficient way.

"Over 17 million people now invest in an Isa, more than double the number who ever held a Tessa or Pep.

"These reforms - to come into effect in April next year - will build on the success of Isas, making them even more attractive by allowing people to save more, and by being more flexible and simpler to use."

It was also confirmed that as part of the reforms Isas would be made available on an indefinite basis.