Welcoming the new ISA

Last year it was reported that the Treasury had asked ISA providers about the practicalities of capping total investments at £100,000.  Anyone expecting the worst in the Budget was pleasantly surprised.

  • Initially the ISA limit rises to £11,880 for 2014/15 (£5,940 for cash element), but more radical changes begin on 1 July 2014:
  • All ISAs will automatically become New ISAs (NISAs).
  • The investment limit for 2014/15 will rise to £15,000, i.e. an increase over the initial limit of £3,120.
  • The distinction between cash and stocks & shares accounts will disappear, so the full £15,000 could be placed in a cash NISA.
  • Transfers will be allowed from stocks & shares NISAs to cash NISAs – the opposite move for ISAs has been possible for some time, but only as a one-way trip.  The reversibility means that the current 20% flat rate tax charge on cash interest in stocks & share accounts will disappear.
  • The restriction on stocks & share accounts investing in fixed interest securities with less than five years to maturity will also be scrapped.

In addition, there will be consultation as to whether to include in the list of eligible investments peer-to-peer lending and debt raised by crowdfunding platforms.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice. The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

18th April 2014