The Treasury is to allow money in cash Isas to be transferred into equity Isas without affecting annual limits as part of its reform of the tax wrapper.
Speaking at the ABI Saver Summit last week, Treasury Economic Secretary Ed Balls said the Government wants to encourage more people to invest in the stockmarket and promote long-term saving.
He said there will still be different limits for cash and equity Isas under the reformed structure, which will be detailed in the pre-Budget report.
Balls announced earlier this month that Isas are to be retained permanently and the regime simplified, hinting that the £7,000 limit might be raised in the pre-Budget report.
He told delegates that rolling Peps into the Isa regime will cut admin costs but while the Pep label will disappear, pro-viders will not have to amalgamate the accounts of clients who have both Isas and Peps.
Balls said: “Individuals with funds saved in the cash component of Isas from previous years will be able to transfer those funds into the stocks and shares component without affecting their annual investment limit.”
Fidelity UK managing director Richard Wastcoat says: “This demonstrates the Government’s commitment to encouraging people to save over the long term and recognises the greater returns investors can expect from equities over the long term.”