ISA becomes NISA for savers
Pensions were not the only savings plans to see a boost from the Budget. ISAs received a welcome increase to the maximum annual investment level.
The Chancellor revealed several welcome ISA surprises, all due to take effect from 1 July 2014. However, as with the pension reforms, not every provider is likely to be up and running on day one:
- All ISAs will become New ISAs (NISAs).
- The overall annual investment limit will rise to £15,000 for 2014/15, an increase of £3,120 over the figure announced last December.
- For Junior ISAs (JISAs), the contribution limit will increase to £4,000 a year.
- New subscriptions can be split in any proportion you choose between cash NISAs and stocks and shares NISAs. If you wish, you can place your entire £15,000 subscription in a cash NISA, not – as previously – a maximum of 50% of the overall limit.
- You can transfer your stocks and shares NISA into a cash NISA. A move in the opposite direction has long been possible, but as a one way ISA trip.
- The investment rules for stocks and shares will be relaxed, allowing you to invest in funds, such as short-dated bond funds, which are currently ineligible for stocks and shares ISAs.
- The 20% flat rate of tax on cash interest earned within stocks and shares ISAs will be abolished.
This is a good time to review your existing ISA investments and decide where your 2014/15 contributions should be invested. If you have cash ISAs, you could consider switching them to stocks and shares NISAs, knowing that you can now return to a cash NISA at a later date. You would lose the capital security that deposits provide, but you could significantly increase the income your (N)ISA provides and have scope for capital growth.
If you have any questions, please feel free to contact us at 020 7614 1000 or email@example.com.
The value of your investment and the income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances. The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.
The information in this article does not constitute advice and should be used for informational purposes only. This content has been provided to Helm Godfrey by Taxbriefs.