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6 things you need to know about NISA rules

6 things you need to know about NISA rules

Category: ISAs

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Do you know about the new ISA rules? Unfortunately it seems that a lot of people don't, with far too few being aware of the changes or how they could benefit individual savers. In fact, research from Halifax has found that 23% of ISA holders surveyed have no idea that their allowance is set to increase and 28% would like more help in understanding the changes, and luckily we're here to offer that support.

If you're not yet fully aware of the rules and how they could affect you, we've got a quick overview of the six key things you need to know about…

  1. The current ISA limit is £11,880, of which just £5,940 can be kept in cash, but as of 1 July 2014 ISAs will become new ISAs (or NISAs) and the tax-free limit will rise to £15,000. You'll still only be allowed to pay into one cash NISA and one stocks and shares version per tax year but the rules are a lot more flexible, and there'll be no separate limit for cash – you'll be able to put the full £15,000 in cash should you wish but you can still put it in stocks and shares or can opt for a combination, giving more choice in how you save.
  1. Your ISA will automatically become a NISA – you don't need to change accounts or really do anything at all, as your provider will take care of the background details. And, if you've got a fixed rate, you'll still have that rate in July (variable rates could change, of course, but that applies at any time).
  1. Currently you can't transfer money from a stocks and shares ISA into a cash version, but the new rules will mean you can do just that. So, if you've got money in a stocks and shares ISA but want to transfer it to a lower-risk alternative in July, there'll be nothing to stop you (just make sure you pick an account that allows transfers, as not all do).
  1. You'll be allowed to combine cash and stocks and shares, so you'll still be able to have a separate cash NISA and a stocks and shares version but will also have the option to combine the two in a single NISA should you prefer. This offers even more flexibility and will make it far simpler to transfer between cash and investments, because if you have a single NISA all your money will be in one place.
  1. You can change ISAs as often as you wish, albeit subject to any penalties that could apply, but just remember that you can only have one active NISA of either version – i.e. one that you're actively paying into – open per year, so if you wanted to transfer your 2014/15 cash NISA (for example) into a new account you'd need to transfer every penny with nothing left behind.
  1. Most providers will let you top-up to the full NISA allowance when it comes into effect, even in fixed rate accounts which usually don't offer the chance to make additions, so you can start building up your ISA pot now to benefit from an entire year's worth of tax-free saving.

All other rules remain the same, such as not being able to top up an ISA from a previous tax year and being unable to rollover any unused allowance. The new rules simply offer a higher tax-free allowance with more simplicity, flexibility and convenience, and if you haven't yet got your ISA sorted for the current year it's a great time to do so – it'll automatically become a NISA when the time comes and most providers will let you top up, so start saving and make the most of your allowance!

What next?

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Find out everything you need to know about saving or investing into an ISA - Download our 2014-15 ISA allowance guide

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