Are you ready to make the most of the new ISA?


1 July 2014: ISAs are an extremely popular savings option with over 14 million of these tax-efficient accounts taken out in the tax year 2012/13* alone. As of July 1st they are likely to become even more popular as new rules that Nationwide campaigned for are introduced.

New rules that Nationwide campaigned for are introduced

Cash savers in particular will feel the benefit as they will now be able to save their entire annual ISA allowance in a cash ISA if they choose. Previously people could only save up to half their yearly ISA allowance in a cash ISA, whereas those who opted for stocks and shares could have invested their entire annual allowance in a stocks and shares ISA, double the maximum available to cash ISA savers.

The new rules introduced on July 1st bring parity to both types of ISA, so you can invest your full allowance in cash or stocks and shares, or a mixture of the two, making ISAs fairer and simpler and giving savers greater choice and flexibility.

On top of that, when the Chancellor announced the new changes in this year's Budget, he also increased the annual allowance for ISAs to a more straightforward £15,000. For cash savers, and this makes up the bulk of ISA users*, that now means they can save up to an additional sum of more than £9,000 in their cash ISA after July 1st, up from the current limit of £5,940.

This is a real boost to all savers, but particularly would-be homebuyers saving up a deposit or people building up a retirement nest egg

This is a real boost to all savers, but particularly would-be homebuyers saving up a deposit or people building up a retirement nest egg. At a time when interest rates remain at all-time lows, it's vital to make as much use as possible of tax-efficient savings.

July 1st will also see welcome changes to transfer rules that will allow people to move their money from stocks and shares ISAs to the cash option if they wish, perfect for people who want easier access to their money or shift some of their savings away from stocks and shares based products, particularly those approaching retirement who want more flexibility around their income.

It's important, however, to act quickly to make the most of these new rules. Savers who took out ISAs at the start of the new tax year in April will have to check if their existing products allow more cash to be transferred in and if there are any time limits on doing so. For people who want to switch between their existing stocks and shares products to a cash ISA, they will need to find a suitable product and allow time for the transfer to take place.

Some people - including the Government – have dubbed the new ISA rules 'NISA'; whatever you think of the grammatical liberties, these changes don't just make the ISA a nice-to-have, they make them a must-have for those wanting to make the most of their savings.

*HMRC data for 2012/13 shows there were 11.7 million cash ISAs taken out and 2.9 million stocks and shares ISAs.

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