The press and the media widely covered the forthcoming changes to ISAs. However, they are so significant and relevent to many of our clients, I thought it would be worth repeating the main changes here.
From 1st July 2014 ISAs will be reformed into a simpler product, the “New ISA” (NISA) and all existing ISAs will become NISAs. From that date the overall annual subscription limit for these accounts will be increased to £15,000 for 2014/15. For the first time, ISA savers will be able to subscribe this full amount to a Cash NISA (currently only 50% of the overall ISA limit can be saved in cash). Investors are able to open one Cash NISA and one Stocks and Shares NISA each tax year. However, once open, the Cash or Stocks and Shares NISA can be transferred between providers unlimited times.
Under the NISA, investors will also have new rights to transfer their investments from a stocks and shares to a cash account (currently only the opposite is possible).
Between 6th April and 1st July 2014, the total amount that can be paid into a Cash ISA is £5,940 and the combined amount paid into Cash and Stocks and Shares ISAs must not exceed £11,880. From 1st July, existing ISAs will automatically become NISAs, with a higher limit and more flexibility. Thereafter an investor can add further money to either their Cash or Stocks and Shares NISA, up to the new £15,000 limit. From 1st July 2014, any money held in a Stocks and Shares NISA can be transferred to a Cash NISA.