Individual savings accounts (Isas) will be simplified a year ahead of schedule, the Treasury has revealed. Ed Balls said a package of simp-lification measures, unveiled in the Pre-Budget Report in December, will take effect in April 2008, 12 months earlier than expected.
The reforms will extend the lifetime of Isas indefinitely, guaranteeing that savers will be entitled to use the shelters to hold at least £7,000-worth of assets each tax year.
In addition, the reforms will drop the distinction between mini and maxi Isas, while still allowing savers to hold both cash and stock market investments in the plans. Savers will also be allowed to move money into Isas from old personal equity plans (Peps), the tax shelters abolished in 1999 when the new scheme was introduced.
The Government said it had wanted to give Isa providers lots of time to update their systems, but financial services companies had told it the reforms could be introduced by April 2008 without difficulty.
While the measures have been broadly welcomed, savings analysts have called for an increase to the £7,000 annual allowance, which has been frozen since 1999. Under Peps and Tessas, tax-free savings accounts also abolished eight years ago, savers were, in effect, able to shelter more than £10,000 a year from tax.
Tomas Carruthers, chief executive of online financial information service Interactive Investor, says: "People clearly value Isas as a savings vehicle, but the Government has to do more to support them."