In a time of low interest rates and few options, savers over 50 will welcome any new opportunities to make their money work harder for them, especially in a tax efficient manner.
Changes to ISAs (now often referred to as NISAs or New ISAs) were announced in the Chancellor's March 2014 Budget.
Read our guide to the different types of ISA.
As from July 1 the annual ISA limit will be increasing to £15,000. This is an increase of 30% on the stocks and shares ISA limit, and for cash ISAs an incredible 160% .
Savers will have the option of putting the maximum £15,000 into whatever combination of cash or stocks & shares NISAs they like, with the added benefit of being able to switch between the two in either direction.
Learn more here about Saga's Stocks and Shares ISAs
What about existing investments?
The previous year’s investments can also be transferred to the new ISAs, again in whatever combination is preferred. However, there may be no need to hold the two types of account, as it is also possible to hold cash within a stocks & shares NISA (although many still find it preferable to keep things separate).
Added flexibility has also been given when it comes to choosing your NISA provider, with savers able to transfer providers as often as they wish.
With around five million people every year using their full ISA allowance, this will be good news for many savers.
It may also encourage more people to save in a tax-efficient environment, thanks to the added attractiveness of flexibility and freedom within the New ISA.
The main changes include:
- An increase of the annual allowance to £15,000.
- You will be able to put the full £15,000 into either cash or stock and shares NISA, or any combination of the two.
- Once they are open, your cash and stocks & shares NISAs can be switched between providers as many times as you wish.
- You will be able to transfer any money held in a stocks & shares NISA into a cash NISA (please contact your stocks & shares NISA provider to do this for you).
- Any previous year’s savings (pre April 6) will now be transferable into cash or stocks & shares NISAs in a proportion of your choice.
- It will be possible to hold cash within a stocks and shares NISA, although for many people it is still preferable to hold a separate cash NISA.
- For those with children or grandchildren under 18, the annual allowance for junior cash ISAs has increased to £4,000.
Please note that you will still only be able to invest in one cash NISA and one stocks & shares NISA per tax year, with a combined maximum contribution of £15,000 for the tax year.
Can I inherit an ISA from my spouse?