1st July 2014 – ISA independence day
24 June 2014 - ISAs have been around for 15 years now, and any tweaks to the tax wrapper during this time have generally been disadvantageous. The 2014 Budget finally reversed that trend and, having firmly moved the burden of responsibility for providing for our own retirement onto the individual, the government is finally trusting us to manage our money.
From 1st July – ISA independence day give or take a few days! - the fully flexible New ISA (or NISA as it has become known) comes into force. Not only will we be able to shelter more of our savings, but we will be able to increase and decrease risk at crucial times, such as when we approach retirement.
The new rules in brief:
- More generous allowance of £15,000
The annual ISA allowance will increase to £15,000. If you have already invested the old maximum allowance of £11,880, don't forget to top it up before the end of this tax year, and if you have a monthly savings plan, don't forget to increase it.
- More investment flexibility
Rather than limiting the Cash ISA allowance, under the new rules you will be able to split the ISA allowance as you wish between a Cash ISA and Investment ISA. You will also be able to transfer your Cash ISA to an Investment ISA and vice versa. Please note that any transfers of current tax-year ISAs must be made in full. Previous tax-year ISAs can be partially transferred.
- More tax-free interest
You've always been able to hold cash in an Investment ISA temporarily – as long as the money was destined for an investment – but investors paid a 20% tax on any interest earned. From 1st July 2014 this will not be the case and not only will you be able to invest in a greater range of cash-type funds via the Chelsea FundStore but any interest earned will be tax-free.
- Junior ISA and Child Trust Funds
The maximum allowance for Junior ISAs and Child Trust Funds is also rising to £4,000. We've still not had confirmation of when we will be allowed to transfer Child Trust Funds to Junior ISAs but we hope it will be in April 2015.