In less than four weeks we will see the introduction of the New ISA. The announcement in March’s Budget was widely welcomed, but what is a NISA and is it really good news for savers?
The current ISA allowance (the amount you can invest in each tax year) stands at £11,880 but only half can be invested in cash. From July 1, the total allowance will rise to £15,000 and greater flexibility will mean that under the new rules you can split the total allowance however you wish between a cash NISA and a stocks and shares NISA. You will also be able to transfer between stocks and shares NISAs and cash NISAs, whereas previous rules only allowed transfers from a cash ISA to a stocks and shares ISA. Interest on cash held in stocks and shares NISAs will now be completely tax-free.
So to put it simply, the NISA will allow savers to accumulate more money, quicker. That is great news and long overdue. Consumer confidence is rising and that is powering the economy. As consumers feel more confident about spending, it also means now is the perfect time to remind everyone of the need to save and there is no better way than to introduce much more attractive products.
Earlier this year, we warned the Treasury of a savings crisis developing in the UK and recommended that greater innovation with ISAs should be part of the solution. So while the NISA is a huge step in the right direction, we would like to see the government go even further and increase the annual limit to £25,000.
This is important because, as our Savings Gap campaign has shown, 25 per cent of adults in the UK are not saving anything for retirement. As well as creating more attractive products, we must also leverage the power of technology. Consumers are already relying on their smart phones and tablet devices to impulse buy and bank. Why should impulse saving and investing be any different? We don’t think it should be and if NISAs are to reach their true potential, we must make them more accessible. That is what we are doing with impulseSave® which is designed to put you, the consumer, in control.
Your capital is at risk. Investments can fluctuate in value and you may not get back the amount you invest. Past performance is not a guide to future performance. Tax rules can change at any time.