In his 2014 Budget, Chancellor George Osborne has announced a
radical overhaul of Individual Savings Accounts (ISAs), abolishing
separate cash ISAs and Investment ISAs and creating a simpler, more
streamlined tax-free savings vehicle. These new ISAs, called New
Individual Savings Accounts (NISAs), will be welcomed by savers who
have been hit by poor returns on their cash ISAs over the past 5
years of record low interest rates.
A single simplified ISA
On 6th April 2014, the ISA limit that could be saved annually is
set to rise from £11,520 to £11,880, with only half this amount
allowed to be saved in cash. However, the new policy means that
from 1st July 2014, it will be possible to save up to £15,000 in
one single ISA pot. This amount can be held in cash only,
investments only, or a mixture of both - in any proportion.
How will the changes work?
Between 6 April and 1 July 2014, the total amount that you will be
able to pay into a Cash ISA is £5,940. If you also have a Stocks
and Shares ISA, you will also be able to pay into that account up
to the existing total combined ISA limit of £11,880.
From 1 July 2014, your existing ISA will automatically become a
NISA, with a higher limit of £15,000 and more flexibility to choose
between cash, stocks and shares, or both - whichever is best for
Going forward, the NISA limit will be reviewed at the end of each
tax year on 5th July, as with existing cash ISAs and Investment
A flexible tax free solution
Added flexibility will be provided by the fact that money held in
stocks and shares ISAs will be permitted to switch to cash ISAs.
The government said that in total, more than six million savers
will benefit from the changes.