Monday 30 June 2014

The New ISA

3 years ago when Leo arrived into the world we found ourselves considering avenues we hadn't given much thought to before. In those early days when friends and family were bestowing our beautiful boy with gifts and treats, we were inundated with a very generous sum of money for Leo. We soon realised that we needed to look into the practical solution of a savings account for our newborn. 

We recruited help from Leo's Granddad who has always been our go to man for financial advice, and he highly recommended that we take a look at an ISA. 3 years later Leo's money is safely tucked away for Leo until he comes to an age where he can use it for his future. 

Now the chancellor has made an announcement in his recent budget speech in regards to changes to ISAs. From the 1st July 2014 ISAs will be reformed into a much simpler product, NISA. We need not worry as all existing ISAs will be automatically converted to the new ISA. This means that Leo's ISA will be benefiting from the new changes.

But what are the changes?

Subscription Limits.

From 1 July 2014 the overall subscription limit set by the Government for 2014/15 will increase from £11,880 to £15,000. It will be possible for new subscriptions to be split in any proportion between a New Cash ISA and New Stocks and Shares ISA - currently, investments into a Cash ISA are limited to a maximum of £5,940. Therefore, the investor will have more choice on where to put their money; invest it all in a New Cash ISA, split it however you want between a New Cash ISA and New Stocks and Shares ISA or invest the full subscription amount in a New Stocks and Shares ISA.

What happens to contributions made from 6 April this tax year?

Any contributions made into an ISA from 6 April this tax year will count against your New ISA limit for 2014/15. If you already have an Cash or Stocks and Shares ISA, you won't be able to open a New ISA of the same type from 1 July. Instead, your existing ISA will turn into a New ISA and your annual limit will automatically increase to £15,000.

New ISA transfers

Currently, you can transfer a Cash ISA into another Cash ISA or move it to a Stocks and Shares ISA. New ISAs will still allow you to do just that. However, with an existing Stocks and Shares ISA, you can only transfer it into another Stocks and Shares ISA. However, from 1 July 2014, the New ISA will also enable you to transfer your savings from New Stocks and Shares ISAs to New Cash ISAs as you wish.

Transfer an ISA to Scottish Friendly

If you want to switch an ISA to Scottish Friendly, My Choice (ISA) accepts ISA transfers. From 1 July this will automatically convert into a New ISA meaning your allowance will increase to £15,000.

For all of the information on the New ISA, Scottish Friendly have put together a informative guide.

You will also see a very helpful video below on the new ISA just have a watch of this short clip as it explains everything in a easy to follow format (using everyday words!).

What I love about saving Leo's money for his future, is that he is going to have the money readily available to him when he comes of age. It may help him buy his very first car or even put a deposit down on his very first home. 

The day will come when Leo is very thankful that we saved up all of those pennies for him, when he is all grown up and taking the world by storm.

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