NISA Transfers
Investments that qualify for a Stocks and Shares NISA
Background
At Budget 2014 it was announced that with effect from 1 July 2014 all ISAs will become New ISAs (NISAs). This applies to all existing ISAs and new accounts opened after 1 July. The NISA will offer flexibility to hold savings in any combination of Cash and Stocks and Shares that the saver wishes as well as an increased overall subscription. The NISA rules will also allow investors to transfer previous years’ ISA savings freely between stocks and shares and cash.
NISA and Junior ISA Subscription Limits
From 1 July 2014 the overall NISA subscription limit for 2014/15 will be £15,000. New subscriptions can be split in any proportion between Cash and Stocks and Shares NISAs as the saver chooses. However, a saver will only be able to pay into a maximum of one Cash NISA and one Stocks and Shares NISA each year.
Any subscriptions made to an ISA since 6 April 2014 will count against the NISA subscription limit for 2014/15, and account holders who have paid into a Cash or Stocks and Shares ISA since 6 April 2014 will not be able to open a NISA of the same type before 6 April 2015. These account holders can make additional payments – up the NISA subscription limit – into their account(s) opened since 6 April 2014 or by transferring their account(s) to another provider that will allow additional amounts to be added.
From 1 July 2014, savers aged 16 and 17 will be able to subscribe up to the £15,000 limit to a Cash NISA, but will still be unable to open a Stocks and Shares account. This is in addition to any amounts paid into a Junior ISA.
The amount that can be paid into a Junior ISA for 2014/15 will be increased to £4,000 from 1 July 2014.
NISA Transfers
From 1 July 2014, ISA rules will permit account holders to transfer savings between Stocks and Shares and Cash NISAs as follows:
- Any previous year’s savings (i.e. amount s paid in before 5 April 2014) can be transferred in whole or in part between Stocks and Shares and Cash NISAs as the account holder wishes, subject to the agreed terms and conditions of their account.
- Savings made in the current year (i.e. amounts subscribed after 6 April 2014) can only be transferred as a whole, and cannot be split.
Investments that qualify for a Stocks and Shares NISA
From 1 July 2014, the qualifying requirements for investments in a Stocks and Shares NISA, which provide that certain investments:
- are subject to the 5 per cent ‘cash-like’ test, or
- must have at least 5 years to run to maturity at the time they are first held in an ISA
will be removed.
This will allow (for example), certain types of insurance policy which do not satisfy the current ‘cash-like test’ and short-dated securities such as retail bonds to be acquired after this date (provided the requirements in relation to listing are satisfied).
Any investments which did not satisfy the 5 per cent ‘cash-like’ test before 1 July 2014 and are held in a Cash ISA can continue to be held in a Cash NISA after 1 July 2014.
From 1 July 2014, investors will also be able to acquire Core Capital Deferred Shares issued by building societies in a Stocks and Shares NISA.
Further, from that date, cash held in a Stocks and Shares NISA no longer has to be held only for the purpose of investing in qualifying investments. Any interest arising on this cash will not be subject to a flat rate charge of 20 per cent.
The Government intends to enable peer-to-peer loans to be held within a NISA and will consult on how to implement this later this year. The Government will also explore extending NISA eligibility to debt securities offered via crowd-funding platforms.
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