ISA rule change needed, says Alliance

ISA rule change needed, says Alliance March 6

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The regulations governing the transfer of stock into an ISA need to be revised in order to ensure they benefit investors, a financial services group has declared.

Under the current rules, Alliance Trust Savings claims that ISA investors are having to pay out almost three per cent stock transfer costs, amounting to costs of more than £200 for some customers.

The ISA and Pep provider is calling for the Treasury to allow in specie ISA transfers to go ahead. Under current rules, ISA investors are required to sell holdings and buy them back inside a fund.

Alliance Trust wants the government to carry out a major overhaul of legislation governing ISA’s, including the removal of the costly sale and buy-back requirement and an increase in the ISA subscription limit to take inflation into account.

ISA investors moving stock from an existing portfolio to an ISA in order to take advantage of the year’s tax-free entitlement currently face steep costs for doing so and loss of significant investment growth, while Peps and pension plans no longer carry the same sale and buy-back requirement.

Alliance Trust Pep and ISA manager, Malcolm Dodds, said: “There is no logical reason for this requirement to sell holdings then buy them back inside an ISA and investors are being penalised arbitrarily. The Treasury scrapped these restrictions for pension savers as part of last year’s A-Day changes, and we urge them to do the same for ISA’s by allowing what are known as in specie stock transfers.”

Written Exclusively by AdFero for ISA Guides

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