Northern Rock - Good news for ISA holders

The panic that overnight turned Northern Rock from a respected High Street fixture to a lame duck saw thousands of holders of ISAs in ‘the Rock’ queuing to withdraw their savings.

Faced with the loss of the Income Tax and Capital Gains Tax benefits which attach to their ISA or the potential loss of the underlying capital, savers bit the bullet and opted for safety.

The Government has now stepped in and announced that, subject to the completion of the appropriate paperwork, a Northern Rock ISA cashed in by an investor after the ‘crash’ can be reinvested in a new ISA with Northern Rock or another ISA provider without penalty, provided that the reinvestment takes place before 5 April 2008.