New ISA NISA Explained. The New Individual Savings Account
Tax free savings for adults and children resident in the United Kingdom (UK)
What if I leave UK? If you leave the UK, you can no longer pay into an ISA but your existing ISA can remain in place - tax free in the UK but not necessarily tax free in the country that you live in.
History of ISAThe conservative government in the 80's launched the personal equity plan a tax efficient savings plan, where you could save lump sums or in regular premiums. They also had the Tessa which was a tax efficient bank account. Labour came into power and launched the ISA where you had either cash or a stocks and shares Isa.
Cash Isa was to replace the Tessa and the stocks and shares Isa was to replace the personal equity plan, so we had the old rules you could have a maxi Isa which was all stocks and shares using all of your allowances or alternatively 2 mini Isa’s, a mini cash Isa and a mini stocks and shares Isa, this was how it was until 2014.
New ISA Rules Started in August 2014
The old coalition government (Liberal/Conservative) created the NISA the new Isa in 2014. Cash and Stock ISAs were combined and you can now have any combination of cash or stocks and shares in a new individual savings account a NISA. Isa’s are taxed privileged investments no tax is paid if it is cash based on your interest that you receive or stocks and shares Isa’s that are capital gains tax free.
There is a slight tax credit deduction on dividends for stock and shares but broadly you receive all of the proceeds tax free. We also have a separate Isa for children called the JISA or the Jeesa the Junior Isa.
But for adults we have the NISA where you have one total combined yearly allowance, it’s just one total Isa allowance where you can invest in any combination you want. with Isa’s all as I would suggest is be careful from a charging perspective because interest rates on cash Isa accounts or NISA is pretty much loss of banks and building society’s give you a headline rate and then all of a sudden gradually it starts to come down.
As far as the stocks and shares element of the NISA just be aware that management charges can vary significantly between Isa groups and what I would do is particularly if you’re looking at stocks and shares based Isa investments get advice from us, because what we will do is charge you a set fee to set up your Isa and what we can then do is keep it very clean where there are no hidden trail commissions or fees paid to advisers and we target the best value for money Isa.
1. ISA Individual Savings Account Allowance 2023
Factfile: Individual Savings Accounts - ISA Allowance
Lump sum investments: Yes
Regular premiums allowed: Yes
Maximum investment (per tax year):
ISA Allowance for Adults 2023
2. Junior ISA Allowance 2023
Flexible payments allowed (stop/start/additional/increase/decrease): Yes
Investment Risk Profiles Available:
Changing funds and risk profile allowed: Yes for normal ISA no for Cash ISA
Moving to another company allowed: Yes
Life Insurance Included: No
Personal Tax Benefits:
Can be held inside Trust: No (many stock market ISAs are already a type of trust)
Suitable For:
Insolvency Compensation Limits:
Brief Description:
Individual Savings Accounts are virtually tax free and have been available since 6 April 1999. You can have an New ISA (NISA) if you are a UK resident adult or a Junior ISA for a child.
BEFORE ISAs ......
3. PEP Personal Equity Plan to ISA Transfers
Personal Equity Plans ceased to exist with effect from 6th April 2008. They have now all been converted as Individual Savings Accounts - ISAs
The information below is for historic reference only.
Factfile: Personal Equity Plans PEP
Lump sum investments: No, not anymore
Regular premiums allowed: No, not anymore
Flexible payments allowed (stop/start/additional/increase/decrease): No, not anymore
Investment Risk Profiles Available:
Changing funds and risk profile allowed: Yes
Moving to another company allowed: Yes - ISA transfer plan would have taken place
Life Insurance Included: No
Personal Tax Benefits:
Can be held inside Trust: No
Suitable for:
Insolvency Compensation Limits:
Brief Description:
Personal Equity Plans effectively ceased to exist on 6 April 2008 where they are now all considered ISAs, individual savings accounts. Personal Equity Plans (PEPs) have been around for a number of years but they can no longer be purchased from 6th April 1999. Many people still hold PEP investments even though they have been superseded by Individual Savings Accounts (ISAs). Personal Equity Plans are very much like the stocks and shares portion of an Individual Savings Account although ISAs do enjoy a lot more investment freedom than PEPs. Even though you cannot take out new PEPs, it is possible to transfer between PEP managers.
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