Providing you with simplicity and greater flexibility
Individual Savings Accounts (ISAs) have been around since 1999, providing a tax-efficient wrapper for savings and investments. However, in the recent Budget, the Chancellor, George Osborne, promised to increase the simplicity and flexibility of ISAs. As of 1 July 2014, there is now a single ISA which has been named the new ISA, or ‘NISA’, which provides a bigger tax break than ever before and more flexibility about how it can be used.
All Individual Savings Accounts have now become New Individual Savings Accounts, including any ISAs opened from 6 April 2014 to 30 June 2014.
How do NISAs differ from ISAs?
- Greater flexibility – You can invest your whole allowance in stocks and shares or cash, or any mixture of the two
- Freedom to transfer – You can transfer existing ISAs from stocks and shares into cash, or the other way around
- Improved tax efficiency – You can now earn tax-efficient interest on cash held in a NISA. Previously, with the exception of a Cash ISA, any cash held within the stocks and shares element of an ISA was subject to a 20% charge on the interest earned
Generous tax break
The ISA allowance has now been increased from £11,880 to £15,000 for the 2014/15 tax year. For any couple, that means they can put aside £30,000 for this tax year, which is a generous tax break. This means you can now save another £3,120 into either cash or stocks and shares in the current tax year. The amount that can be paid into a Junior ISA for the 2014/15 tax year has also increased from £3,840 to £4,000. Do bear in mind that whilst the NISA does allow a generous amount to be sheltered from tax during your life, the total amount forms part of your estate on death and so could be subject to 40% tax.
Moving your existing investments
You also now have the full flexibility of moving your existing investments in a Stocks & Shares ISA to a Cash ISA, or vice versa. You should not withdraw sums from your Stocks & Shares account yourself in order to deposit it into a Cash NISA, or the other way around. If you do, any amount that you pay in may count as a fresh payment against your overall limit of £15,000.
NISA subscription limit
It is worth noting that if you have paid into a Cash or Stocks & Shares ISA since 6 April 2014, you will not be able to open a further NISA of the same type before 6 April 2015. You may however make additional payments– up to the £15,000 NISA subscription limit – into your existing account(s).
As of 1 July 2014, there is now increased flexibility in the way that you can use your ISA allowance.
You can now allocate:
- the full £15,000 in a Stocks & Shares ISA
- the full £15,000 in a Cash ISA
- any combination of amounts between a Stocks & Shares ISA and a Cash ISA up to the new limit
For example, from 1 July you could choose to save or invest:
- £15,000 to a Cash NISA and nothing to a Stocks& Shares NISA
- £15,000 to a Stocks & Shares NISA and nothing to a Cash NISA
- £5,000 to a Cash NISA and £10,000 to a Stocks& Shares NISA
- £10,000 to a Cash NISA and £5,000 to a Stocks & Shares NISA – a combination of amounts between a Cash
- and Stocks & Shares NISA, up to the overall annual limit of £15,000
Download your free NISA Guide today!
Investment advice will be provided by our sister company ad+ Financial.
The value of your investments can go down as well as up and you may get back less than you invested.
The Financial Conduct Authority does not regulate Tax Advice, Trusts, Cash ISAs and National Savings and Investments.
Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor.
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