Individual Savings Accounts (ISAs) provide a tax-free ‘wrapper’ for investments. An ISA may be a cash account or an investment in stocks and shares. For 2013/14 it is possible to invest up to £11,520 of which 50% (£5,760) can be cash.
A junior ISA is available for UK resident children under 18 who do not have a Child Trust Fund (CTF). The maximum investment into a junior ISA is currently £3,720.
With effect from 1 July 2014 the following changes to the ISA regime will be made;
- Existing adult ISAs will be reformed into a new product the ‘New ISA’ (NISA). The subscription amount will be increased to £15,000 for 2014/15 and savings can be held in cash or stocks and shares in any combination that the saver wishes so there is no restriction on the amount which can be held as cash. Investors will be able to transfer their investments from stocks and shares to a cash account and changes will be made to allow for a wider range of investments within the NISA.
- The maximum annual contribution into a junior ISA will increase to £4,000
In addition, annual contributions to CTFs, which provide for tax free amounts for children born between 1 September 2002 and 3 January 2011 payable on reaching their 18th birthday, will also be increased to £4,000 with effect from 1 July 2014.
The new NISA will increase the choice and flexibility available to those wishing to hold tax advantaged accounts. The announced increases in the amounts which can be invested and the removal of the cash restriction currently in place for existing ISAs will be welcomed by savers.