The New NISA

The tax efficient savings account

The government announced in the Budget 2014 that from 1 July 2014, ISAs (Individual Savings Account) will be reformed into a new simpler product, the 'New ISA' (NISA) with equal limits for cash, and stocks and shares. 

Stocks and Shares ISAs invest in Corporate bonds; stocks and shares and other assets that fluctuate in value.

Tax treatment varies according to individual circumstances and is subject to change.

Investors do not pay any personal tax on income or gains, but ISAs do pay tax on income from stocks and shares within the funds.

How it works

New Individual Savings Accounts are available to all UK residents over 18 years of age, 16 years of age for Cash NISAs. They benefit all taxpayers, as any income or capital gains received from investments held within an ISA do not have to be declared to the tax man.

It is permissible to open one Cash NISA and one Stocks and Shares NISA each tax-year. However, once open, it is allowable to transfer your Cash or Stocks and Shares NISA between providers as many times as you wish. NISAs can invest in cash or in stocks and shares (including but not limited to unit trusts, investment trusts, and Open Ended Investment Companies).

NISA limits

The NISA will also offer you the option to save your whole NISA allowance of £15,240 in cash, stocks and shares, or any combination of the two.

For example, in the current tax year you could choose to pay in:

  • £15,240 to a Cash NISA and nothing to a Stocks and Shares NISA
  • £15,240 to a Stocks and Shares NISA and nothing to a Cash NISA
  • £5,240 to a Cash NISA and £10,000 to a Stocks and Shares NISA
  • £10,240 to a Cash NISA and £5,000 to a Stocks and Shares NISA
  • a combination of amounts between a Cash and Stocks and Shares NISA, up to the overall annual limit of £15,240

Under the NISA rules you will also be able to transfer previous years' ISA savings freely between stocks and shares and cash if you wish. Any subscriptions you have made to an ISA since 6 April 2015 will count against the £15,240 NISA subscription limit for 2015-16.

If you have paid into a Cash or Stocks and Shares ISA since 6 April 2015, you will not be able to open a further NISA of the same type before 6 April 2016. You may however make additional payments – up to the £15,240 NISA subscription limit - into your existing account(s) or by transferring those account(s) to another provider that will allow additional amounts to be added.

If you are aged between 16 and 18, you can hold a Cash NISA but cannot open a Stocks and Shares NISA. You are able to pay up to £15,240 into your Cash NISA for each tax year. This is in addition to any amounts that you pay into a Junior ISA that you hold.

It is possible to hold cash tax-free within your Stocks and Shares NISA if the provider allows this. However, many savers may prefer to hold separate accounts for cash and stocks and shares investments, and can continue to do so.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

You must be aged 16 or over to open a Cash ISA. It is important to note that only £5,100 can be saved in any one tax year. The tax year runs from 6th April to 5th of April, every year. So if, for instance, you deposit £5,100 into your Cash ISA at the beginning of the tax year, but decide three months later to withdraw £1,500, you can't put any more money into the Cash ISA until the following tax year.

Free Consultation

You can have a free initial consultation. There's no fee, no catch and no obligation on your part.  We can call you to arrange a time that suits you.

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