Individual Savings Accounts (ISAs) are, for many clients who are UK taxpayers, a very efficient way of saving and it should be considered whether an ISA should form part of the overall plan for the structure and management of an individual's investment portfolio.

From April 2008 a major change in the savings regime will allow investors to merge their Personal Equity Plans (PEPs) into the ISA wrapper. At the time the change was announced the Government gave clear indication that it intended that the revised structure should remain in place for the long term. Bringing the ISA and PEP together will, for many individuals, improve the flexibility for management of their investments and should result in enhanced performance.

The restructured ISA wrapper offers two further distinct benefits for the investor. There is no Capital Gains Tax, so the investor can buy and sell shares without suffering tax on the gains. Also, although standard rate tax is deducted from dividend income; should interest be received gross then it remains tax free.

Any distribution from an ISA bears no further tax and does not need to be included in tax returns. These benefits are useful for the investor who is active and is likely to be paying Capital Gains Tax as well as the investor who needs income, since the incidence of tax is light.

Pritchard will help clients select the right course of action for this new savings regime.