Monday, 30 June 2014

All you Need to Know about the NISA - New ISA


1st July 2014 New ISA, NISA, Super ISA

So the Chancellor has announced that, starting from tomorrow, the current ISA will be reformed to the New ISA (NISA), or Super ISAs. As all current ISAs will be automatically converted into a NISA, I wondered what the difference is, and how it affects us.

After some research, which isn't hard as there are plenty of helpful guidelines on the Internet like the one from Scottish Friendly, I learned the following:

1. Subscription limit set by the government for 2014/2015 increase from £11,880 to £15,000. Under 16 Junior NISA limit will be £4,000, but over 16 Junior NISA will be £15,000, limited to New Cash ISA only. 


2. Freedom to split the amount in any proportion between a New Cash ISA and New Stocks and Shares ISA

- Current Cash ISA's limit is £5,940
- now you can either invest all £15,000 into the New Cash ISA, split it however you want between the New Cash ISA and New Stocks and Shares ISA, or invest all £15,000 into the New Stocks and Shares ISA


3. Any contributions made into a current ISA from 6th April 2014 will count against your New ISA limit for 2014/ 2015. So if you have already deposited the full £5,940, you will be able to top up your New ISA with a further £9,060 (do check with your bank if you have a Fixed Rate ISA account).


4. Your current ISA will automatically convert into a New ISA. ie, your Cash ISA will become New Cash ISA starting from tomorrow, and Stocks and Shares ISA will automatically convert to a New Stocks and Shares ISA, each with the limit automatically increased to £15,000.

- If you have both accounts and are going to split your £15,000 between the two, do keep an eye on the limit for both accounts, making sure than the total of both doesn't exceed the £15,000 limit.


5. Freedom of transferring money between New Cash ISA and New Stocks and Shares ISA

- Currently you can transfer money from a Cash ISA to another Cash ISA or a Stocks and Shares ISA. But you cannot transfer money from a Stocks and Shares ISA to a Cash ISA
- The New Stocks and Shares ISA will also allow you to transfer money to a New Cash ISA as you wish, and same for New Cash ISA to New Stocks and Shares ISA




It all sound quite good doesn't it? Like many others, I wondered whether there is a catch. I found this article from thisismoney.co.uk, published in March 2014. Banks and building societies might have come up with new solutions to go around it already, but I think it's worth a read, especially if you have a Fixed Rate ISA. For further ISA news, banks like Scottish Friendly provide ways for you to stay up to date. For example, you can follow Scottish Society through Facebook, Twitter and Google +. I'm sure other banks offer similar service too.

Happy saving!