NISAs – a new phase for ISAs

Individual Savings Accounts (ISAs) enter a new phase from 1 July 2014. At present, ISA contributions for the 2014/15 tax year are capped at £11,880. The entire amount can be invested in a stocks & shares ISA, or up to £5,940 can be saved into a Cash ISA. However, from 1 July 2014, the ‘New ISA’ (NISA) limit will increase to £15,000 and you can invest as much as you like of this allowance in cash, stocks & shares or a combination of the two. Investors will also be able to transfer ISA savings from previous years freely between stocks & shares and cash.

Any ISA subscription made between 6 April and 30 June 2014 will be counted against the £15,000 NISA subscription and you will not be allowed to open up a new NISA for the current tax year from 1 July. Instead, you will have to top up the existing account. Do check with your provider’s terms and conditions – particularly if you have already opened a fixed-rate cash ISA.

The range of investments that can be held within a NISA is also expanding and this is likely to lead to an increase in new products from providers that, in turn, will provide greater choice for savers. One thing will not change, however – once it’s gone, it’s gone. At the end of each tax year, you lose any unused ISA allowance, so make sure you act in good time and, if you are unsure about anything, do seek professional advice.