The New ISA [NISA]

by Kate on March 31, 2014

in Money

Individual Savings Accounts or ISAs, are a well known UK savings product, which allow savers and investors to put an annual sum of money away from the taxman. Because this is a tax free product, the interest rate received is almost always higher than you would get in a current account. Any sum up to the annual allowance can be added to an ISA, each year. If you keep topping up your ISA, you can accumulate a large sum of tax free savings and investments. If left untouched, these savings can also benefit from compound interest.

Currently, the annual allowance for a cash ISA is £5760. The allowance is double for those who want to invest in stocks & shares. It’s also possible to take out a combination ISA of investments and cash, to a total of £11,520, as long as the cash element does not exceed £5760.

Earlier this month, the Chancellor George Osborne, announced that from 1 July 2014, ISAs will be reformed into a much simpler product, the New ISA (NISA).

So what’s new about NISAs?
Besides a snazzy name change, the NISA will have an increased annual allowance, to £15,000. The confusing investment/cash combination rules have gone too. You’ll be able to split the ISAs in any proportion you see fit, between cash and stocks & shares.

If you already have an ISA, it will be converted into a NISA. You don’t have to apply for an increased limit, and will benefit from the changes automatically.

If you haven’t already invested your 2013/2014 allowance yet, you’ve only got until the 6th April 2014 to do so!

This video from Scottish Friendly explains a few more details…

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