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IFAs welcome five-year extension to Isa limit

IFAs and fund managers welcome Chancellor Gordon Brown&#39s decision to extend this year&#39s £7,000 Isa limit for the next five years.

The move, announced in last week&#39s pre-Budget speech, will shelve original plans to reduce the limit to £5,000 for the tax year 2001/02, retaining the existing limits until April 2006. Investors can currently hold up to £7,000 a year in an Isa, of which no more than £3,000 can be in cash and £1,000 in life insurance.

The Chancellor has also reduced the age limit for cash Isas to 16 from 18.

The costs of the extension of the Isa limit to the Gov ernment is estimated to be £20m in the first year, rising to £275m a year over six years. Lowering the age limit for cash Isas is expected to result in a negligible cost.

Merrill Lynch Investment Managers is among the companies which campaigned for a lower age limit for Isas.

Managing director (marketing) communications Rich ard Royds says that, although the company welcomes the bulk of the Isa announcements, it was disappointed that the age reduction was not extended to stocks and shares Isas.

He says: “You might think that the appropriate product for younger savers would be a stocks and shares Isa, as these are the people who are supposed to be longer-term investors.

“Hopefully, they will think about making these changes in the future.”


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Coventry offers mortgages on-line

Coventry Building Society is offering home loans over the internet. Its introductory mortgage is at 5.39 per cent fixed until early 2003 or there is a discounted rate deal of 2.35 per cent off its standard variable rate which stands at 7.7 per cent. Coventry will also pay for the valuation and legal costs.


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