Virtually all the headlines surrounding the recent Budget were about changes pensions.
Rightly described as the biggest changes for 100 years, they will have far-reaching implications for many of our clients.
New NISAs
With all the attention devoted to pensions, it was easy to overlook a radical overhaul of the rules governing Individual Savings Accounts – ISAs as they were formerly known and NISAs (New Individual Savings Accounts) as they’ll now be called.
The changes come into effect from 1 July. Here’s a summary:
- This means that if you already have £11,880 in an ISA for the 2014/2015 tax year you will be able to add an additional £3,120 from 1 July.
- The division between stocks and shares ISAs and cash ISAs will disappear. Previously you could only hold 50% of the annual ISA allowance in cash: from 1st July all the £15,000 can be held as cash if you so choose.
- For the first time ever savers will be able to transfer previous years’ funds from stocks and shares ISAs into cash ISAs.
- Limits on Junior ISAs and Child Trust Funds are also being increased and will rise to £4,000 from 1st July.
- The current annual limit on ISAs will be increased from £11,880 to £15,000
Why the new rules?
George Osborne said his Budget was for “the makers, the do-ers and the savers” and he’s certainly delivered on the savings part of that statement.
He was concerned that people in Britain “borrow too much and save too little” and these changes are an attempt to address that.
They’re also a way of rewarding those savers in cash ISAs who have put up with very low interest rates for some time now.
All in all, they’re far reaching changes and we very much welcome them.
What should you think about?
First of all you can now save almost three times the previous limit in a cash ISA – up from £5,940 to £15,000. For savers whose first concern is security, ISAs now present a very attractive option with a husband and wife being able to save £30,000 a year in a tax-free cash investment.
ISAs have also become much more flexible. Flexibility is the key. ISAs should now play a much greater part in your financial planning, but it will be more important than ever to make sure that your ISAs are performing well.
Have you got questions about the new rules? Would you like to discuss your current ISAs?
Call us on 020 7993 4898 or email us at advice@www.townclosefp.co.uk.