Budget Savings Update

Savings Update

The Budget in March brought in some opportunities for your savings and the key points are briefly summarised below:

Individual Savings Account (ISA)

From the 1st July 2014, we will see the introduction of a New ISA (NISA). Under the NISA

–      a maximum annual contribution of £15,000

–      the investor decides mix of cash/stocks and shares within this limit

–      the ability to switch stocks and shares ISAs into cash

–      an improvement in permissible investments e.g. peer to peer loans and lifting of restrictions on maturity dates of securities and

–      an increase in JISA/Child Trust Fund annual limits from £3,720 to £4,000.

Savings Taxation

From the 6th April 2015, the 10% savings rate will be abolished and replaced with a £5,000 zero rate band for savings income, and the rules for use will be broadly the same as those that apply to the current 10% band.

National Savings

There is an increase in the Premium Bonds investment limit from £30,000 to £40,000 on 1st June 2014; and increasing it again to £50,000 during 2015-16. The number of £1 million Premium Bonds prizes per month is rising to two, starting with the August 2014 prize draw.

With effect from January 2015, a new National Savings Bond for people aged over 65 will be introduced. This will have an investment limit of £10,000 and offer 2.8% p.a. gross over 1 year and 4% p.a. gross over 3 years. They will be taxed in line with other savings income.