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Budget 2014: Cash Isa allowance up to £15,000 in New Isa (NISA)

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Budget 2014: Cash Isa allowance up to £15,000 in New Isa (NISA)

edited 30 November -1 at 12:00AM in ISAs & Tax-free Savings
10 replies 5.6K views
edited 30 November -1 at 12:00AM in ISAs & Tax-free Savings
"The Government will merge both cash and shares Isas from July - with the limit increased to £15,000"
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Budget 2014: Cash Isa allowance up to £15,000 in New Isa (NISA)

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Replies

  • Archi_BaldArchi_Bald Forumite
    9.5K posts
    may be this could be merged with the thread that has been going on this for a few hours already?
    http://forums.moneysavingexpert.com/showthread.php?t=4925537

    Links to fact sheets etc are also in that thread.
  • IsbjornIsbjorn Forumite
    14 posts
    New NISA rules would suggest that someone with a legacy stocks & shares ISA portfolio in excess of £85k should be able to disinvest this into cash and then distribute it amongst a number of cash NISAs such that no one of them exceeds the £85k deposit protection scheme. But, if the saver only uses new NISAs for this purpose it could take several years to disperse a portfolio of say £200k. However, moneysavingexpert.com/news/banking/2014/03/isa-allowance-to-rise-to-15000 states the principle that the saver can open ISA (or NISAs) for PAST financial years and transfer legacy savings into them, which would seem to provide a satisfactory solution to disperse the money sooner. However, I have never heard of this before so; (1) can anyone else verify the accuracy of this statement and (2) does anyone have experience of deposit organisations which will open up legacy (past financial years) ISAs and allow PARTIAL transfers in? (I have read somewhere that very few, if any, are willing to accommodate partial transfers).
  • Archi_BaldArchi_Bald Forumite
    9.5K posts
    You cannot open any ISAs or NISAs for past years. All allowances expire on the last day of a tax year and cannot be carried forward into a new tax year.
  • edited 26 March 2014 at 10:44PM
    IsbjornIsbjorn Forumite
    14 posts
    edited 26 March 2014 at 10:44PM
    Ah, yes, it is well known that one cannot open an ISA for past years and subscribe NEW money to such a past-years ISA. The MSE page referred to clearly states a principle which implies that old ones can be opened to enable OLD money (from previous years) to be transferred in - so, how does one do this? Quote from relevant MSE page, with important sentences underlined, (indeed, the second sentence implies that one has been able to open old ISAs for transferring in OLD ISA money for quite some time in the past....):-

    How will NISAs work?
    From 1 July, you could choose to pay in:
    • £15,000 to a cash NISA and nothing to a stocks & shares NISA.
    • £15,000 to a stocks and shares NISA and nothing to a cash NISA.
    • A combination of amounts between a cash and a stocks & shares NISA, up to the overall annual limit of £15,000.
    • You can only open one cash NISA and one stocks and shares NISA to put new money into each tax-year. But you can also open other NISAs to transfer old Isas into. This is the same rule as for current Isas.
    Unless there is a simple way to disperse legacy S&S ISA savings in some way like I have suggested, then there is not a lot of security to be gained by disinvesting a portfolio of more than £85k into cash NISAs as one will then be over the £85k deposit protection scheme limits - it could take several years to divest a, say, £200k+ portfolio* into cash NISAs at £70k per year into cash NISAs (on top of the new money £15k subscription). Or is this promise of being able to easily transfer out of stocks and shares into cash just another "too good to be true" carrot by the Government? [Some people have over £1M in a stocks & shares ISA - could they ever have enough new years to diversify into pots no greater than £85k before they die?].
  • edited 26 March 2014 at 11:24PM
    Archi_BaldArchi_Bald Forumite
    9.5K posts
    edited 26 March 2014 at 11:24PM
    It's as you underlined - the same procedure that has always applied for ISA transfers. You fill in the transfer form of the new provider and they will transfer the ISA for you. You could always transfer to umpteen ISAs if you wanted to - the only restriction was that "If you want to transfer the money you have put into your ISA in the current tax year, you must transfer all of it. "

    The only new bit is that you can now also transfer S&S ISAs to cash ISAs.

    EDIT: I can't actually see any of the ISA millionaires and near millionaires wanting to shift much of their S&S ISA into cash, given the abysmal cash ISA rates.
  • edited 26 March 2014 at 11:51PM
    IsbjornIsbjorn Forumite
    14 posts
    edited 26 March 2014 at 11:51PM
    Well, if savers have accumulated a substantial S&S ISA portfolio over several years and are now at, near or past retirement age, with the stock market at an almost all time high and interests rates due to start slowly climbing in future years, it could make good sense to preserve that nest egg by reducing capital risk by diversifying into cash deposit schemes now that the new rules will permit this. For example, my investment trust holdings only generate just over 2% in dividend returns - as I am no longer working/earning to replace any lost capital value, then if I can get similar or even slightly lower returns on cash deposit (N)ISAs along with the security of the £85k deposit protection scheme it seems a no-brainer to start disinvesting and spreading the resulting cash across several cash (N)ISAs each with a different licence.......hence my raising of this topic obo anyone else in a similar circumstances.
  • G6JPGG6JPG Forumite
    146 posts
    I understand that from Sunday, there'll be the new ISA allowance of 9xxx for 2014/5, which will actually go up in July to 15000, and you're allowed to add the extra 5-6k when that happens, as far as the taxman is concerned.

    However, are there any banks (or building societies or whatever) who don't allow this? I ask because in previous years I've encountered cases where what you open is a fixed, unalterable, bond-type thing, which is fixed at the amount you opened it at and they won't let you add any more.

    (I encountered this when wanting to open an ISA with one institution, and then walk literally across the road to another to arrange the money transfer once I had the sort code and account number; the bank I was transferring from would do such a transfer over the counter for free, but if I wanted them to do a cheque they were going to charge me 30 to 50. And the other institution wouldn't give me the account number unless I opened the account then and there. I offered to do so with a pound and add the rest in a moment, but no go.)
  • brewerdavebrewerdave Forumite
    6K posts
    Part of the Furniture 1,000 Posts
    ✭✭✭✭
    G6JPG -I suspect a number of institutions won't allow top ups of fixed ISAs in July -or,at least, not those taken out early in the new tax year. Some allow a window ~ 30 days for top ups.
  • badger09badger09 Forumite
    7.9K posts
    Ninth Anniversary 1,000 Posts Name Dropper
    ✭✭✭✭
    brewerdave wrote: »
    G6JPG -I suspect a number of institutions won't allow top ups of fixed ISAs in July -or,at least, not those taken out early in the new tax year. Some allow a window ~ 30 days for top ups.

    Several have already announced that they will accept deposits into fixed rate products, to cover the additional allowance from 1 July - Santander and Halifax spring to mind, but I'm sure there are/will be others ;)
  • Archi_BaldArchi_Bald Forumite
    9.5K posts
    G6JPG wrote: »
    I understand that from Sunday, there'll be the new ISA allowance of 9xxx for 2014/5, which will actually go up in July to 15000, and you're allowed to add the extra 5-6k when that happens, as far as the taxman is concerned.

    The ISA allowance from April 6 is £11,880, of which max £5,940 can be put into a cash ISA, and all of it can be put into an S&S ISA. Nothing about 9xxxx. On July 1, the allowance increases once more, to £15,000, and you will be able allocate as much of this as you like to cash ISAs, too. You will also be able to transfer from S&S ISAs to cash ISAs (reverse transfer has always been possible).

    Other rules remain unchanged - you can only deposit into one cash and one S&S ISA in any financial year. Although you are, in theory, allowed to change ISA provider. In practice, you may not wish to do so, or it may not be allowed if you chose a fixed term cash ISA.

    You just have to read the T&Cs before you commit any money - no ISA will stop you from using your entire allowance but to get certain privileges, you may have to deposit your entire allowance in one go.

    Because the increase in July is very unusual, several fixed term cash ISA providers have already announced an extension of their deposit window, but it remains a window that is significantly shorter than the entire tax year.

    Aside from all this, cash ISAs aren't a panacea and, depending on your circumstances, you can make a lot more money in current accounts these days. If you are in it for the longer haul, S&S ISAs look way better than cash ISAs, too.
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