NISA’s – The Basics
From July 1, 2014, ISAs – Individual Savings Accounts – are being simplified and renamed… to NISA.
New ISA (NISA)
The main changes are as follows:-
- Annual Allowance increased to £15,000. It is currently £11,520 (with an increase to £11,880 on April 6).
- The full £15,000 can be split between CASH and STOCKS AND SHARES in any proportion you choose.
- Once they are open, your cash and stocks & shares NISAs can be switched between providers as many times as you wish.
- You will be able to transfer CASH NISAs into STOCKS AND SHARES NISAs as you can now, but you will also be able to transfer STOCKS AND SHARES NISAs into CASH.
- This will apply to any monies you have already invested in the old ISAs as they will all become NISAs on the 1st July 2014!
- For those with children or grandchildren under 16, the annual allowance for junior cash ISAs has increased to £4,000.
- 16-18 year olds will be able to put £15,000 into a CASH NISA but no money into a STOCKS AND SHARES NISA.
6th April – 30th June…..beware of fixed rate restrictions!
Old ISA rules are still in force until the 1st July but the previous annual allowance of £11,520 was increased to £11,880 on 6th April. When we reach the 1st July, all plans will become NISAs and you should be able to ‘Top-Up’ to the new annual allowance of £15,000 by adding a further £3,120. However, if you are investing prior to the 1st July, particularly if into a Fixed Rate deal, do check that you will be able to add to your plan after the 1st July….not all Fixed Rate plans will allow this and you will not be allowed to take out another plan with a different provider for the Top-Up amount!
The more complicated bit….
Any simplification of the rules surrounding financial products is to be welcomed and for risk averse investors, the opportunity to save tax on more of their CASH savings is helpful. However, with inflation running at around 2.7% per annum and interest rates on most CASH ISA Accounts under 2%, the ‘real’ value of money held in CASH is still falling. Investors wanting to protect the value of their capital for the medium to longer term (and who doesn’t?!) should at least consider Stock Market linked funds appropriate to their appetite for Investment Risk.
This is where it gets more complicated and talking to Nick Lawson, our investment expert, will help you understand what is meant by Investment Risk and what type of NISA is suitable for you, so book your own personal, complimentary ‘NISA Know-How’ session with Nick now – you can reach him on 07808 627983 or 01904 655202 or email firstname.lastname@example.org. or visit www.hghwealth.co.uk.