NISA New ISA
2nd June 2014
The New ISA
What is the New ISA?
From July 1 2014 all ISAs will become New ISAs (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
What is changing on 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.
What is the limit for NISA savers under the age of 18?
If you are aged between 16 and 18, you can hold a Cash NISA but cannot open a Stocks and Shares NISA. From 1 July 2014, you will be able to pay up to £15,000 into your Cash NISA for the tax year 2014-15. This is in addition to any amounts that you pay into a Junior ISA that you hold.
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 accounts for cash and stocks and shares investments, and can continue to do so.
What are the rules for making deposits to an ISA between 6 April and 1 July 2014?
Between 6 April and 30 June 2014, the total amount you can pay into a Cash ISA is £5,940. If you have a Stocks and Shares ISA, you can also pay into that account, but the combined amount you pay into your Cash and Stocks and Shares ISAs must not exceed £11,880.
From 1 July 2014 however, you can (if permitted by your account terms and conditions) make additional payments to your Cash or Stocks and Shares NISAs in whatever combination you choose, provided that you do not pay in more than the overall NISA limit of £15,000 within the tax year (6 April 2014 to 5 April 2015).
Any amounts that you have paid into an ISA between 6 April and 30 June 2014 will count against your £15,000 NISA subscription limit for 2014-15.
Will this change only apply for 2014-15, or is it permanent?
The new rules will apply for amounts paid to a NISA in 2014-15 and in future tax years. Each autumn, the Chancellor usually announces the new ISA limits for the next tax year.
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.
I hold a Junior ISA – is the subscription limit changing?
Yes. On 1 July the amount that can be paid into a Junior ISA for 2014-15 will increase to £4,000.