Plans unveiled by the Government to encourage more people to save their money in tax-free ISAs have been welcomed by industry experts.

At the heart of the plans are a range of reforms which aim to make ISAs more attractive to savers and easier for them to understand.

Economic secretary to the Treasury Kitty Ussher has put in place regulations which one expert said will make ISAs "a permanent fixture on the savings landscape".

As part of the proposals, the current distinction between mini and maxi ISAs will be abolished.

Instead people will have an annual ISA allowance of £7,200, £3,600 of which can be saved in cash, with the rest invested in shares through the same or a different provider.

Under the changes, which will come into force from April 6, 2008, savers will also be able to transfer money saved in cash ISAs into shares, and all Personal Equity Plans will automatically become stocks and shares ISAs.

More than 17 million people have chosen to use ISAs as a convenient way to save since they were first launched in 1999.

Ms Ussher said: "These reforms, to come into effect in April next year, will build on the success of ISAs, making them even more attractive by allowing people to save more, and by being more flexible and simpler to use."

Responding to the announcement, Richard Saunders, chief executive of the Investment Management Association, said: "We have long called for improved incentives to ISA saving.

"Making the ISA a permanent feature of the savings landscape and removing the distinction between mini and maxi ISAs will make the ISA easier to understand and should encourage savers to take advantage of their attractive benefits."

And Tony Vine-Lott, director general of the Tax Incentivised Savings Association, said: "These changes will make it even easier for savers to prepare for the future throughout their life.

"Coming off a record year for ISAs, we anticipate the momentum to save via the Government's flagship vehicle to continue and gather pace well into the future."

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