Fiducia Wealth Management
Posted in Financial Advice, NISA on 23.05.14

The New Individual Savings Account

In his March 2014 Budget speech, the Chancellor announced that from 1 July 2014 all existing and recently opened ISAs will become New ISAs (NISAs).

The NISA will be more generous and will offer flexibility to save an 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.

We have summarised below our understanding of HRMC’s recently published details.

Annual Subscription from 1 July 2014

You will be able to split the amount you pay into a NISA between a Cash NISA and a Stocks and Shares NISA subject to the new overall annual limit of £15,000. Previously, it has only been possible to save up to half of the overall ISA subscription limit into a Cash ISA.

Subscriptions you have made to an ISA since 6 April 2014 will count against the £15,000 NISA limit.

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 subscription limit, into your existing account(s) or by transferring those account(s) to another provider that will allow additional amounts.

Why can’t I invest my overall ISA limit in cash from 6 April 2014?

This is to give ISA providers sufficient time to prepare their systems to apply the new limits.

What is the annual subscription for JISA savers?

On 1 July the amount that can be paid into a Junior ISA for 2014-15 will increase to £4,000.

If you are aged between 16 and 18, you can hold a Cash NISA only. 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?

You will be able to hold cash tax-free within your Stocks and Shares NISA if you wish.

What are the rules for making deposits to an ISA between 6 April and 1 July 2014?

The total amount you can pay into a Cash ISA before 1 July 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 before 1 July 2014.

From 1 July 2014, you can make additional payments to your Cash or Stocks and Shares NISAs in whatever combination you choose, subject to the overall limit of £15,000 within the 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 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 of this account do not allow further amounts, 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.

New rules on transfers from 1st July 2014

After 1st July 2014 you can transfer between Cash and Stocks and Shares NISAs as many times as you wish. This applies to amounts that you have paid in since 6 April 2014 as well as amounts that you have paid in during previous tax years.

What amounts can be transferred from a Stocks and Shares NISA to Cash NISA?

Different rules will apply depending upon when you paid the relevant amounts into your Stocks and Shares ISA.

  • If you wish to transfer savings relating to any current year’s payments to your account: (i.e. amounts you have paid in after 6 April 2014), you must transfer these as a whole
  • However, any savings relating to payments to your account in earlier years (amounts you have paid in before 5 April 2014) can be transferred to a Cash NISA in whole or in part. Not all ISA providers will allow part transfers, so you should check this

Your future NISA Strategy

This new flexibility and increased savings limit presents an excellent opportunity to build up a larger portfolio of Cash and Stocks and Shares in an environment sheltered from both income tax and capital gains tax.

Combining this with the newly announced pension options will mean careful planning now, together with expert ongoing management of your NISA and pension portfolio, to provide tax-optimised savings and income in the future.  Do contact your adviser at Fiducia if you have further questions, or if you would like to benefit from an award-winning strategy by becoming a client do get in contact.

If you would like to know more about how we as Financial Advisers can help you set, plan and achieve your financial goals then financial planning section of  our website: Financial Planning or send us email at: [email protected]

The information contained in our website is for guidance only and does not constitute advice which should be sought before taking any action. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occurred in connection with the content hereof and any such action. Professional financial advice is recommended for every case.

Fiducia is a multi award-winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border.

Fiducia Wealth Management Ltd. Dedham Hall Business Centre, Brook Street, Dedham, Colchester, Essex, CO7 6AD.

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Fiducia Wealth Management
Posted in Financial Advice, NISA on 23.05.14