New ISAs July 2014

As of today, July 1st 2014, ISAs in the UK have transformed into NISAs (short for New ISAs). The following article will explain what this change means and how to take advantage of it.

Like ISAs, NISAs are a species of saving account which allow individuals to accumulate interest without being taxed. Unlike ISAs, where the amount of money that you could pay in annually without being taxed was capped at £5,940, NISAs have a more generous tax-free limit of £15,000.

In addition, the previous rule which meant that only 50% of your annual ISA allowance could be placed in a Cash ISA has now been removed. This means that individuals are free to invest up to £15,000 however they want to.

Although individuals can now pay more money into these savings accounts, unfortunately, interest rates are still low. In particular Cash ISAs which provide instant access and a variable rate are the least attractive. As a result, it may be more beneficial to put the money in a fixed-term NISA which has a higher interest rate.

If you already have a fixed-rate Cash ISA, banks and building societies are now allowing you to top up these accounts as the tax-free limit has changed. Be sure to seize this opportunity!

Best Cash New ISAs 2014/2015

If you are willing and able to lock away your money for three years, your best bet is the Yorkshire and Clydesdale bank which offer an interest rate of 2.45%. Unfortunately, these ISAs can only be opened in branch which may be inconvenient for those who do not live in the area. The next best alternative is Nationwide’s three year New ISA which has a respectable interest rate of 2.25%.

If you are looking for an ISA with easy access the two best providers are nationwide and Hinckley & Rugby Building Society which both payout 1.75%. Of the two providers, Nationwide’s ISA is the most flexible as the Hinckley & Rugby ISA requires a notice period.