The New Individual Savings Account (NISA) rules were introduced in July 2014 designed to help and encourage people to save more for their future and give savers and investors more flexibility and a larger tax-efficient allowance than ever before. This tax efficient ‘wrapper’ can hold investments such as unit trusts, other collectives such as OEIC’s, shares and cash.

 

Four out of ten people told the consumer organisation Which? that they would save more as a result of the annual limit increasing to £15,000, up from £11,880.

Over the previous 15 years, more than 23 million people have opened ISAs, totalling over £440 billion, according to HM Revenue & Customs.

The increase in the total amount you can save and invest in what are now called New Individual Savings Accounts (NISAs) is not the only change since July.

Did you know?

• You can decide how you want to split the £15,000 between the Cash and Stocks & Shares parts of a NISA.

• Or you can allocate the whole £15,000 into either a Cash or Stocks & Shares NISA. Previously you could only put up to half the annual ISA allowance into a Cash ISA.

• You can move your money from a Stocks & Shares NISA into a Cash NISA, or vice versa. Previously you couldn’t move money from a Stocks & Shares ISA into a Cash ISA

New flexibility and higher limits

• You pay no tax on the interest you earn in a Cash NISA.

• With a Stocks & Shares NISA, you pay no capital gains tax on any profits and no tax on interest earned on bonds. The dividends paid on shares or funds do have the basic rate of 10% tax deducted. This means that higher and additional rate taxpayers don’t have to pay their higher rate of tax on their dividend payments.

It’s never too late to start

If you’ve already paid into an NISA in this current tax year, you can top it up to the new limit if your provider allows – each account provider will have different deadlines by which date all requests to increase amounts must be processed.