60 Second Guide to the Budget
With probably the most talked about Budget for many years and finally one that has gone the way of savers, we give you a 60 second guide to the changes around ISAs and what this will mean for both cash savers and investors.
New tax year, new limits
From 6th April 2014, the annual ISA investment limit for 2014/15 will initially rise by £360 to £11,880 (of which up to £5,940 may be in cash). The limit for the Junior ISA (JISA), which is beginning to attract more investors, will simultaneously rise to £3,840.
More radical reform
From 1st July 2014, more radical changes will occur:
- All existing ISAs will become new ISAs (NISAs), removing the distinction between Cash and Stocks & Shares ISAs
- The maximum you can save into a NISA will rise to £15,000 for the 2014/15 tax year, a further increase of £3,120
- The rule which prevents more than 50% of the total limit being placed in a Cash ISA will be scrapped and so the entire £15,000 NISA contribution limit can go into cash deposits.
- The ban on transfers from Stocks & Shares ISAs to Cash ISAs will be removed, thereby introducing full two-way transferability between deposits and investments and vice versa.
- Investment options will be widened to include, for example, peer-to-peer lending.
- The JISA limit will rise to £4,000 and this will also apply to Child Trust Funds (CTFs). The date from when CTFs can be transferred into JISAs was not brought forward and remains, provisionally, April 2015.
Fair Investment view
Commenting on the Budget, Oliver Roylance-Smith, head of savings and investment at Fair Investment Company Limited said: “These are significant changes to the ISA rules for which the government is to be applauded. For those who would rather only invest into a Cash ISA you will be able to use your whole ISA allowance and if you would prefer to reduce the risk of your ISA portfolio you will have the option of transferring some or all of your ISA into cash based options.”
He continued, “A couple will soon be able to protect £60,000 from the tax man over two tax years thereby offering the potential to build up considerable sums, especially over time. By combining greater simplicity with a 30% increase to the contribution limit each of us has far greater flexibility and control of our tax-efficient savings. We are witnessing a savings revolution.”
For more information on our most popular ISAs, see below.
No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular plan. If you are at all unsure of the suitability of a particular product, both in respect of its objectives and its risk profile, you should seek independent financial advice. Tax treatment of ISAs depends on your individual circumstances and is based on current law which may be subject to change in the future. Always remember to check whether any charges apply before transferring an ISA.