The Treasury is planning new rules that will allow investors, who lost ISA savings due to the financial firm going bust, to refill their annual allowance. 
British savers can currently invest up to £10,680 in a tax-free ISA (individual savings account), of which £5,340 can be in cash.
Previously the investor would have lost out if the financial institute they invested with collapsed, because they would not have been allowed to reinvest the money they lost. However, the Treasury is now planning to change this ruling so that savers who have lost out can top up their ISAs again.
The Financial Secretary to the Treasury, Mark Hoban, gave a statement to MPs where he outlined the plans which included:
- Allowing those who have lost their cash ISA to reinvest the equivalent amount with a different provider in a new account in the same financial year.
- Allowing investors to invest any compensation paid out to them if a stocks and shares ISA has been affected by a financial company’s collapse.
- For those investors affected by the Lehman Brothers collapse to be able to use the same amount of investment elsewhere, regardless of whether they have been paid compensation or not.
Mr Hoban said: “The changes will enable investors whose Isas are affected by the failure or default of a financial firm to continue to benefit from tax-advantaged savings,”
“They also demonstrate the government’s commitment to ensure that the Isa remains a secure, accessible and tax-advantaged saving product.”
This new plan puts in place arrangements that were made following the collapse of Icesave.
Next April the allowance for ISA savers in the UK will go up to £11,280 each year, of which half can be saved as cash.
