Isas just got Nisa

With effect from today, the new Isa rules come into play. The result is a transformation in the way Isa schemes work, providing much more flexibility along with significantly larger tax-free allowances.

Under the New Isas (or Nisas as they are being called), the amount you can save each year has been raised from £11,880 to £15,000. For couples, this means £30,000.

You also now have much more flexibility in many ways. Firstly, you can now save up to £15,000 in a cash Isa for the 2014-15 tax year, an increase of £9,060 from the previous allowance of £5,940.

Secondly, the rules are now much more flexible about transferring between cash and equity Isas. You can now transfer from a stocks and shares Isa to a cash Isa, and vice versa – and as many times as you like. Up until now, you could only transfer from a cash Isa to a stocks and shares Isa.

The new rules also offer a wider investment choice for investors, including short-dated bonds and peer-to-peer loans.

In addition, whilst you have always been able to hold cash in a stocks and shares Isa, any interest was paid net of basic rate tax. From today, any interest on cash held in a stocks and shares Isa is completely tax-free.

The Junior Isa’s limit has also increased to £4000.

These major changes to the Isa rules, with the greater limits and the flexibility provided, might present an opportunity for you to reassess your investment portfolio.

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