Ask the expert: NISAs

The recent changes to ISAs can be confusing, especially when they don’t come into affect until July, but the new tax year has already begun. Here’s what you need to know.

new rules for ISAs

“I know Mr Osborne’s Budget said the ISA allowance is going up to £15,000 this year and I can now put in all into a cash ISA, but I’ve spoken to my bank and they’ve told me I can’t do it yet. Why not? Also, is this a good place for me to invest my money?”

Carl Lamb, Managing Director of Almary Green:

The new style ISAs – NISAs – are to be launched on 1 July and the ISA allowance will at that point be raised to £15,000. Until then, you are limited by the current ISA limit which stands at £11,880 and only half of that – £5,940 – can be put into a cash ISA.  There’s no reason why you shouldn’t open a cash ISA now and put up to £5,940 in it: the ISA will be converted to a NISA once they are available and you can then top it up if you wish.  You could also, if you wish, put funds into a stocks and shares ISA now and transfer it to your cash NISA in July.

“With the ability to put up to £15,000 into cash ISAs every year, your savings could build substantially”

The important thing to remember, however, is that you only open one cash ISA/NISA account and one stocks and shares ISA/NISA account for new savings in any tax year, but you can open additional new ISA/NISA accounts of either type for money transferred from existing ISAs.

The other thing you will be able to do from 1 July onwards is to transfer any existing stocks and shares ISAs to a cash ISA account.

This is good news for savers in that it gives them greater flexibility. Bear in mind that interest rates for cash ISAs are currently really low, but having said that, once in a cash ISA, the interest year on year will always be tax free, so if interest rates improve in the future, their value will be enhanced. With the ability to put up to £15,000 into cash ISAs each year, your savings could build substantially.

Stocks and shares ISAs do have the potential for higher returns but with that comes a greater degree of risk and you should make sure that you understand the risks involved before embarking down the stocks and shares route.

A final point to make is that if you are moving funds from one ISA or NISA to another, then it must be done using a proper transfer between providers. If you withdraw the money and then put it into a new ISA/NISA account, the money is considered a new investment and will count towards your current year’s allowance.

The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

The tax treatment of investments depends on individual circumstances and is subject to change. Find an independent financial adviser to help you make the most of your savings.

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About the author

Carl Lamb Founder and Managing Director of Almary Green Investments Ltd, Carl is passionate about delivering a quality service to clients.


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