The New ISA (NISA)
From July 1 2014 all ISAs will become NISAs. This applies to all existing ISAs and new accounts opened after 1 July. The Government is changing the name to reflect the significantly increased limits and flexibility that will be available to account holders.
The NISA will be more generous and will offer flexibility to save your NISA annual allowance of £15,000 in cash, stocks and shares or any combination of the two. Under the NISA rules you will also be able to transfer previous years’ ISA savings freely between stocks and shares and cash if you wish.
NISA subscription rules from 1 July 2014
From 1 July 2014, you will be able to split the amount you pay into an ISA between a Cash NISA and a Stocks and Shares NISA as you choose – up to the new overall annual NISA limit of £15,000. Previously, it has only been possible to save up to half of the overall ISA subscription limit in a Cash ISA.
Any subscriptions you have made to an ISA since 6 April 2014 will count against the £15,000 NISA subscription limit for 2014-15. If you have paid into a Cash or Stocks and 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) or by transferring those account(s) to another provider that will allow additional amounts to be added.
I have paid into a Cash ISA before 1 July 2014 and this doesn’t allow me to add further payments. What can I do?
You should discuss this with your ISA provider. You can only pay into one Cash ISA and one Stocks and Shares ISA in each tax year. So, if you have paid into a Cash ISA since 6 April 2014 and the terms and conditions of this account do not allow further amounts to be added, you cannot open another Cash ISA before 6 April 2015.
However, you may make additional payments by opening a Stocks and Shares account, or by transferring your Cash ISA to another provider that will allow additional amounts to be added. The terms and conditions of your account should make clear whether there are any restrictions on the number of payments that you can make.
Can I now have a single NISA for both my cash and stocks and shares investments?
Yes, you will be able to hold cash tax-free within your Stocks and Shares NISA if you wish, and your provider allows this. However, many savers may prefer to hold separate NISAs for cash and stocks and shares investments, and can continue to do so.
Junior ISA (JISA)
On 1 July the amount that can be paid into a Junior ISA for 2014-15 will increase to £4,000 from the current £3,600. Any Child Trust Funds (CTFs) can be transferred into the JISAs from April 2015. Please note that only parents may open a JISA, but anyone can make additional contributions. Grandparents may consider gifting some their £3,000 annual gift exemption, but if you are concerned about the lack of control of the money when the child reaches eighteen, then drop us a line.
If you are making regular contributions you may like to adjust them or simply make a top up if you have paid the maximum which applied until 1st July. This will be raised as a matter of course with our clients when we carry out our periodic reviews, however if you would like to discuss this issue now, don’t hesitate to contact us.