The government announced some important new changes to the ISA at the Budget Statement 2014. This included the biggest ever annual savings allowance increase of £3,840, as well as a simplification of how much you can save in different types of ISA.
From 1st July 2014, ISAs will be changed into a simpler product called the ‘New ISA’ (NISA). The main changes that could affect you are the increased overall allowance, and how much you are able to save in each type of ISA.
How will it affect you?
As it stands: At the moment and up until 5th April 2014, your overall annual ISA allowance is £11,520. However there are a variety of ways you can use this allowance.
Option 1: You can save up to your entire allowance of £11,520 into a Stocks and Shares ISA.
Option 2: You can save up to £5,760 in a Cash ISA, leaving the rest to be invested into a Stocks and Shares ISA.
As of 6th April 2014: Your new annual ISA allowance will increase to £11,880. The ISA will continue to work in the same way as before, just with new limits. For example, your options would be:
Option 1: You can save up to your entire allowance of £11,880 into a Stocks and Shares ISA.
Option 2: You can save up to £5,940 in a Cash ISA, leaving the rest to be invested into a Stocks and Shares ISA.
As of 1st July 2014: The NISA will be introduced, replacing the existing ISA. The NISA is basically a simpler and easier to understand version of the ISA with an increased annual savings allowance of £15,000.
You will now have flexible allowances for both Cash and Stocks and Shares, so you can save as much as you want in a Cash NISA as well as a Stocks and Shares NISA, as long as your combined annual NISA savings do not go over the £15,000 limit.
A summary of changes to the ISA:
- Your ISA will automatically become a New ISA (NISA)
- Your annual NISA for 2014/15 will be set at £15,000
- You will have the option of saving your entire ISA allowance of £15,000 in a Cash NISA, a Stocks and Shares NISA or any combination of the two
- Any money you have in a Cash NISA can be transferred to a Stocks and Shares NISA, and vice versa
As of April 5th the originally planned changes to the ISA allowances will still come into effect, meaning the overall ISA allowance will increase to £11,880. However, as of 1st July 2014, the NISA will replace the ISA, and the above changes will replace these ISA allowances.
Shepherds Friendly will send a further update to its members as soon as more details are released.
>If you have any other questions about the NISA, you can contact our member support team via telephone by calling 0800 526 249