People who had tax-free cash savings with the failed Icelandic bank Icesave have been given more time to move their refunded money to another Isa account.

Their money was returned with a certificate to enable them to re-invest it without losing its tax-free status.

The certificate was only valid until 5 April 2009 and some customers are yet to receive it.

So the Revenue has extended the deadline by six months to 5 October 2009.

The change has been announced in the Revenue's Isa Bulletin dated 29 March which is being sent to Isa providers.

It says: "A small minority of Isa investors have not received their compensation and/or their Isa certificates. These investors… would therefore lose their Isa tax advantages. The time limit for reinvestment will be extended from 5 April 2009 to 5 October 2009."

A spokesman told BBC Radio 4's Money Box that the new deadline would apply to all savers not just those whose certificates were delayed.

"It applies to every Icesave Isa investor who has not yet reinvested their money in an Isa with another provider. This will include those investors who have not received a certificate and/or compensation payments," he said.

Transfer

Icesave collapsed on 7 October 2008 leaving more than 300,000 UK customers unable to access £5bn of savings. Much of that was in Icesave's table-topping Isa account which paid 6.1%.

When the government announced that no-one would lose any money in the collapse it still faced the difficulty of what to do about Isa money. Normally if an Isa is cashed in rather than transferred, it loses its tax-free status.

In the weeks that followed, the money was refunded direct into a bank account by the Financial Services Compensation Scheme. Customers were then sent a Reinstatement Certificate which allowed the money to be moved to another Isa by 5 April. It is this deadline which has now been extended to 5 October 2009.

All the Reinstatement Certificates, including those still not issued, will have the old deadline on them. But Isa providers should now accept them until 5 October. The Revenue said it will not be writing to investors to tell them about the new deadline.

Michelle Slade of Moneyfacts told the programme investors would have to find an Isa that accepted transfers in.

"Leeds Building Society five year fixed-rate allows transfers in, as does Halifax fixed-rate Isa," she said. "If you want more access, then NatWest has its Isa at 3.2% that allows transfers in, as does Marks & Spencer's Money Advantage cash Isa, which pays 3.1%."

Copyright: Paul Lewis BBC Radio 4's Money Box 28/03/09