Q and A: Twice as Nisa: 6 questions answered
So what is all this about a Nisa? I thought that was a shop?
No, Nisa is short for New Individual Savings Account, the Treasury’s rebranded Isa which it unveiled yesterday. The Nisa savings allowance limit from July 1 2014 will be £15,000 a year.
Is the £15,000 Nisa savings allowance really such a big deal?
Yes because of the huge hike from where it was previously. This year’s allowance for 2013-14 is £11,520. It is set to rise on 6 April to £11,880 and then it will rise again in July to £15,000. Normally the Treasury increases the limit by the rate of inflation. The hike is 30 per cent.
Should I wait until July before putting my cash in then?
You could but it doesn’t really matter. You can put £11,880 on 6 April and then top up the £3,120 difference to take it up to the £15,000 limit in July. All Isas will automatically become Nisas on 1 July anyway so you can sit back and relax.
Osborne said he is introducing more “flexibility”. What on earth is he talking about?
There two types of Isa – a cash Isa and a stocks and shares Isa. There are tons of rules around the cash Isa. For example, you can only put half of your yearly allowance into it. You’re also banned from moving money stored in your stocks and shares to your cash Isa.
OK, so what’s going to change under the new rules?
In an Nisa you can put all of your allowance into a cash Isa, which means you can stick £15,000 into the cash Isa – triple the £5,940 under the current system. Five million people a year normally hit their cash Isa limit so it will help them greatly. You can also now transfer money freely between cash Isas and stocks and shares Isas.
What can I put into an Nisa then?
The government yesterday announced plans to consult on permitting peer-to-peer loans to be included into Isas. It will also lift the restrictions on the maturity of assets, meaning retail bonds with short maturities will be allowed.