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.

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 £15,000 in cash, stocks and shares, or any combination of the two.

For example, from 1 July you could choose to pay in:

  • £15,000 to a Cash NISA and nothing to a Stocks and Shares NISA
  • £15,000 to a Stocks and Shares NISA and nothing to a Cash NISA
  • £5,000 to a Cash NISA and £10,000 to a Stocks and Shares NISA
  • £10,000 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 £15,000

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 2014 will count against the £15,000 NISA subscription limit for 2014-15.

If you have paid into a Cash or Stocks and Shares ISA since 6 April 2014, you will not be able to open a further NISA of the same type before 6 April 2015. You may however make additional payments – up to the £15,000 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. From 1 July 2014, you will be able to pay up to £15,000 into your Cash NISA for the tax year 2014-15. 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.