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New ISAs: Great News For Savers!

A welcome surprise for savers in the March Budget was the relaxation by the Chancellor of the rules governing tax-free ISAs (Individual Savings Accounts).

The essential message is that from 1 July 2014:

  • ISAs will change into a new, simpler product, the ‘New ISA’ (NISA), with an annual investment limit of £15,000 (an increase of £3,480 over the 2013/14 figure);
  • NISAs will have no restrictions on the amount you can      put into cash or stocks and shares.

Mix ‘n match options

From 1 July, you can invest your whole NISA allowance of £15,000 in either Cash or Stocks and Shares, or any combination of the two (previously, it was possible only to save up to half of the ISA limit in a Cash ISA.)

Interim rules before 1 July

The interim rules from 6 April until 1 July could give rise to confusion, so bear these points in mind:

Until 1 July

  • The total amount you can pay into a Cash ISA is £5,940.
  • You can also pay into a Stocks and Shares ISA, but the      combined amount you pay into ISAs must not exceed £11,880. You can put the full amount into stocks and shares.

Any payments you’ve made to an ISA since 6 April 2014 will count against the £15,000 NISA subscription limit for 2014/15. If you have paid into a Cash or Stocks and Shares ISA since 6 April 2014, you will not be able to open a further NISA of the same type before 6 April 2015.

However, you may make additional payments – up to the new £15,000 limit – into your existing account(s) or by transferring those account(s) to another provider.

From 1 July

Your existing ISA will automatically become a NISA with the higher limit of £15,000 and greater flexibility. From 1 July, you can then add further money to either your cash or stocks and shares NISA, up to the new £15,000 limit.

Remember, remember

Only one Cash NISA and one Stocks and Shares NISA can be opened in each tax-year. However, you can then transfer your Cash or Stocks and Shares NISA between providers as many times as you wish.

And finally…

  • Junior ISA and Child Trust Fund thresholds are lifted to £4,000 from 1 July.
  • The Government is to consult on enabling peer-to-peer loans to be held within a NISA.
  • We’re here to help with any queries you may have on the new NISA regime!

The value of the investment can go down as well as up and you may not get back as much as you put in.