Skipton BS first to outline Nisa plans
Customers will be able to make use of their full NISA allowance of £15,000 in July, even if they lock into a fixed-rate cash Isa or Junior Isa (Jisa) earlier in the 2014/15 tax year.
Between 6 April and the end of June savers can deposit the maximum cash Isa allowance of £5,940 into a Skipton's Fixed Rate ISA (its 1 Year Fixed Rate Cash ISA to 15 April 2015 currently pays 1.6% for the annual interest option or 1.59% for the monthly option). Then from 1 July when existing cash and stocks and shares ISAs are merged to become Nisas, customers can top up to the new £15,000 subscription limit for the rest of the tax year.
They will have to top up within the month of July to secure the fixed-rate the rest of their cash Isa deposit enjoys.
All Skipton easy-access Isa customers who deposit money before the introduction of NISAs will also be informed of the increased limit they can take advantage of from July.
Similarly, Jisa savers will be able to deposit up to £3,840 between 6 April and the end of June before topping up to increased allowance of £4,000 from 1 July. Skipton's current JISA pays 3.02%.
Skipton's head of products, Kris Brewster, said: "We have long campaigned on behalf of our customers for more simplification and fairness in tax-free savings. We welcomed this, the first budget to really address their plight in this historically low interest rate environment."
He added: "In what is usually unheard of in fixed-rate accounts, savers in Skipton's Fixed Rate ISAs for the 2014/15 tax year will be able to top up throughout the whole of July up to the new maximum Nisa limit."
Available from 1 November 2011, the Junior ISA will replace child trust funds (CFTs), which have been phased out. Junior ISAs will have a £3,000 limit and will be offered by high street banks, building societies and other providers that currently offer ISAs to adults. You can invest in either stocks and shares or cash. But, unlike CTFs, there will be no government contributions into each child’s savings pot. Money invested in Junior ISAs will be “locked in” until the child is 18, and the ISA will default to an adult one.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.
There are limits to how much you can invest in any tax year. For 2011/12, the limit is £10,680. Of that, the maximum you can invest in cash is £5,340 and the balance of £5,340 can be invested in shares (individual company shares or investment funds). If you don’t take the cash ISA allowance, you can invest up to £10,680 into a stocks and shares ISA.