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Savers can reinvest lost ISA funds

The Treasury has announced new rules to protect savers who have invested in an ISA with a financial institution which subsequently collapses.

Previously, this money would have counted as part of the £10, 680 investment limit (of which £5,340 can be in cash). The new plans enable savers to reinvest the money lost with a different provider in the same tax year.

Furthermore, individuals can also invest any compensation received if their stocks and shares ISA is impacted by the institution’s collapse. Those affected by the fall of Lehman Brothers can invest the same amount elsewhere, whether they have obtained any compensation or not.

In April, the ISA investment limit will increase to £11,280.