The NISA effect
The New ISA (NISA) that was announced by the Chancellor as part of the 2014 Budget announcements came into effect on 1 July 2014. The NISA introduced major changes to the old ISA system by introducing equal limits for cash and stocks and shares. This provides savers with the ability to transfer funds from stocks and shares ISAs to cash ISAs allowing far greater flexibility.
The NISA has a far more generous annual investment limit of £15,000 an almost tripling of the pre 1 July 2014 cash limit of £5,940 and a significant increase from the old £11,880 allowance for stocks & shares ISAs. Any subscriptions made to an ISA between the 6 April and 30 June 2014 will count against the £15,000 NISA subscription limit for 2014-15.
The Government estimates that by 2018/19 over 6 million people will benefit from the higher limit. A recent press release by the British Bankers’ Association (BBA) revealed that July saw a strong increase in savers’ cash holdings in high street bank NISAs following the changes.
Richard Woolhouse, chief economist at the BBA, said:
‘The banks have been working with the government to help rebuild Britain’s savings culture. So it’s really encouraging to see evidence of savers taking advantage of the new cash ISA regime in the latest figures.’