New ISAs are here. Here's all you need to know about the changes.
From today (1st July), the world of Individual Savings Accounts (or ISAs, as they’re better known) changes dramatically. ISAs are now New ISAs, or NISAs.
What’s changing?
Everyone in the UK aged 16 or over has an annual tax-free ISA allowance, which you can hold in cash, stocks and shares, or a combination of both.
The annual tax-free allowance has increased from a maximum £11,880 to £15,000. What’s more, whereas before you could only have a maximum of half your ISA allowance in cash (so £5,940), you can now have the whole lot in cash if you want to.
And you couldn't previously transfer past stocks & shares ISAs into cash, but you could transfer past cash ISAs into stocks and shares. The new rules mean you can move your ISA money either way.
Which way to go?
If you want to save into a Cash ISA, you have four choices.
Easy access ISAs allow you to withdraw your money when you want without any penalties. These have variable interest rates, which could go up and down, and some come with an introductory bonus that usually lasts for a year. These ISAs usually have the lowest interest rates.
You can get a slightly better rate by opting for a notice ISA, which allows you to withdraw your money if you give sufficient notice.
[SPOTLIGHT]Or there are regular saver ISAs, which offer better rates, albeit only for a year. You can save a maximum amount each month, equivalent to a twelfth of your annual ISA allowance.
The best rates are usually on offer from fixed rate ISAs. With these, you lock your money away for a set period of time and if you access it early you’ll be penalised with a loss of some or all of your interest.
In terms of stocks & shares ISAs, if you want to choose your own you have a variety of investments to pick from, including company shares, index tracker funds (which aim to track a specific index of shares, for example the UK FTSE100), managed funds and bonds. Or you could opt for a ready-made portfolio, built for you based on how much you have to invest, how long you want to invest for and your attitude to risk.
You can open your ISA yourself via an investment platform such as Hargreaves Lansdown, Fidelity or BestInvest, or via a stockbroker
Make sure you shop around, as different platforms and stockbrokers charge different annual fees for holding your ISA, and some also have a multitude of additional hidden charges.
Bear in mind that stocks & shares ISAs are riskier than Cash ISAs, and the past performance of an investment is no guide to its future.
If you're new to stocks & shares ISAs, have a read of our Beginner's guide to stocks & shares ISAs.
Cash ISAs not so nicer right now
Unfortunately Cash ISA rates are presently in the doldrums, thanks mostly to banks and building societies being able to borrow cheap money from the Bank of England. This means they don’t need savers’ money at the moment.
Here are the top rates right now ahead of the new ISA launch, starting with instant access.
|
Account |
Interest Rate (AER) |
Minimum deposit |
Bonus |
Notes |
|
Coventry BS ISA Reward |
2.50% |
£1 |
None |
Transfers and new subscriptions. Must have held Coventry BS ISA in February 2013 to qualify. |
|
Coventry BS Branch Instant ISA |
2.00% |
£1 |
None |
New subscriptions only. |
|
Nationwide BS Flexclusive ISA |
1.75% |
£1 |
None |
New subscriptions only. Must hold Nationwide current account. |
|
Cheshire BS Easy Saver ISA |
1.60% |
£1 |
None |
New subscriptions only. |
|
Derbyshire BS Easy Saver ISA |
1.60% |
£1 |
None |
New subscriptions only. |
|
Virgin Money Easy Access E-ISA |
1.50% |
£1 |
None |
Transfers and new subscriptions. |
|
NS&I Direct ISA |
1.50% |
£1 |
None |
Transfers and new subscriptions. |
|
Skipton BS Online Bonus Cash ISA |
1.50% |
£1 |
0.25% for first 12 months |
Transfers and new subscriptions. |
| Halifax ISA Saver Online | 1.50% | £1 | 1.25% for first 12 months |
Transfers and new subscriptions. |
|
Penrith BS ISA |
1.50% |
£100 |
None |
Transfers and new subscriptions. |
| GE Capital Direct GE Saver Cash ISA | 1.50% | £500 | None | Transfers and new subscriptions. |
| Nationwide Instant ISA Saver | 1.50% | £1,000 | None | Transfers and new subscriptions. |
And here are the top fixed rates.
|
Account |
Interest rate (AER) |
Minimum deposit |
Length of fixed rate |
Notes |
|
Virgin Money Fixed Rate Cash E-ISA |
3.00% |
£1 |
Five years (fixed until 24th July 2019) |
Transfers and new subscriptions. |
|
Coventry BS Fixed-Rate ISA |
2.75% |
£1 |
Four years (fixed until 31st May 2018) |
New subscriptions only. |
|
Clydesdale/Yorkshire Bank Cash ISA Fixed Rate Bonds |
2.45% |
£2,000 |
Three years (fixed until 31st October 2017) |
Transfers and new subscriptions. |
|
Virgin Money Fixed Rate Cash E-ISA |
2.10% |
£1 |
Two years (fixed until 24th July 2016) |
Transfers and new subscriptions. |
|
Virgin Money Fixed Rate Cash E-ISA |
1.76% |
£1 |
One year (fixed until 24th July 2015) |
Transfers and new subscriptions. |
If you already have a fixed rate Cash ISA and are thinking about topping it up, make sure you take a look at our guide to New ISA top-up deadlines 2014/15.
This article has been updated
More on saving and investing:
Beginner's guide to stocks & shares ISAs
Nutmeg offers portfolio management service free for rest of 2014