Satisfying Britons’ desire for simplicity and accessibility

The New Isa, which has already earned the acronym Nisa, will come into existence from July 1 2014, so if investors have not already started considering how to utilise the new savings tool, now is the time.

The Nisa will have an annual limit of £15,000 and provide investors with equal limits for cash, and stocks and shares. Maike Currie, associate investment director at Fidelity Personal Investing, notes: “We’re conditioned to think of March/April as the time to top up our Isas. However, with the Nisa seeing the light on July 1, investors should start thinking about where they will be investing their tax-free allowance.

“Sweeping changes to Isas announced in this year’s Budget will see the annual limit increase significantly, and a broader range of investments permitted within the tax wrapper.”

Although the increase in the annual allowance is taking place part way through the tax year, investors should be aware that this will realign with the tax year from April 2015.

Helen Wilson, consultant at Broadstone Pensions and Investments, says she has seen many savers holding off making annual and regular contributions in order to benefit from the “best new launch” deals. From July 1 she expects savers to transfer funds from previous cash, and stocks and shares Isas into one account.

Ms Wilson adds: “The government is making every effort to encourage savers and those who have already maximised their Isa investment in 2014-15 will be able to ‘top up’ their accounts to £15,000. This will make Isas generally more attractive and offer savers the potential for gaining better rates of return than are currently available in cash Isas without locking them into one type of investment.”

According to Broadstone Pensions and Investments, a family of four, based on two adults and two children aged 15 and 17, will be able to save up to £49,000 tax free annually, although children under 18 are unable to invest in stocks and shares. “The flexibility that this new style of account offers should tick the majority of boxes for most savers,” says Ms Wilson.

Certainly the aim behind the simplification of Isas seems to be to offer flexibility to those who are already setting aside savings in a cash or stocks and shares Isa, and to encourage those who are not, to start saving.

Following the Budget in March, Tony Stenning, head of UK retail at BlackRock, referred to its own ‘Investor Pulse’ research, which shows that 40 per cent of Britons save or invest in Isas, with many using the product to supplement their pensions.

“Isas are a simple, accessible and tax-efficient savings vehicle,” he explains. “Their continued success shows that Britons are inclined to save more if they have greater certainty around the taxable benefits within well-designed products that are both accessible and simple.”

For the first time, savers will also be able to hold peer-to-peer loans within their Nisa.

Mark Williams, business line manager for inheritance tax at Octopus Investments, points out: “The merging of cash and shares Isas, along with the significant rise in the annual subscription limit, comes on the back of last summer’s change in rules allowing investors to hold Aim shares in their Isas, which paved the way for the first inheritance tax-free Isa.

“This has been warmly received by investors, so we expect this latest legislation to further increase appetite for Isa investments.”

Ellie Duncan is deputy feature editor at  Investment Adviser

KEY POINTS - Nisas

Higher limit

Under the Nisa, which launches on July 1, the annual allowance has increased to £15,000.

More flexibility

Investors can invest in cash and/or stocks and shares in a Nisa and will also be able to transfer existing Isas from cash into stocks and shares, or vice versa.

Top-up potential

Savers who have already reached the current Isa allowance this tax year will be able to top it up to £15,000 from July 1 2014.