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New ISAs allow more tax-free saving

Piggy bank fifty pound note30/6/14

By Vicky Shaw

Savers will be able to stash more of their cash away tax-free and have more flexibility over their pots when new "super-ISAs" come into being on Tuesday.

From July 1, people will receive a more generous annual ISA allowance of £15,000, which they can hold in stocks and shares, cash or any combination of the two.

ISAs will become "New ISAs", also known as NISAs, from tomorrow and this applies to all existing ISAs as well as new accounts opened after July 1.

The measure was announced in the Budget and follows calls from savers' campaigners for the rules around ISAs to be relaxed.

£15,000 super-ISA limit

Previously, people have only been allowed to save up to half of their annual ISA allowance in cash and the remainder in stocks and shares.

Any money which has already been placed into an ISA during the current tax year, which started on April 6, will count towards the new £15,000 super-ISA subscription limit for 2014-15.

Under the new rules, savers will also be able to transfer previous years' ISA savings freely between stocks and shares and cash if they wish.

Despite the greater freedom for savers, some experts have warned that the typical potential returns on offer have worsened since Chancellor George Osborne made the announcement in spring.

Lower take-up of ISAs

Figures released by the British Bankers' Association (BBA) last week showed a plunge in people ploughing their savings into ISAs compared with a year ago.

The BBA's report said: "There has been a lower take-up of ISAs this year, with £5.3 billion being deposited with high street banks during March to May, compared with £9 billion in the same months of 2013."

Between April 6 and June 30 this year, the total amount someone can pay into a cash ISA has been £5,940.

If someone has a stocks and shares ISA, they have also been able to pay into that account, but the combined amount they pay into both types of ISA has not been allowed to exceed £11,880.

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