Individual Savings Accounts (ISAs) offer a means of receiving tax free income on savings to taxpayers. However, there is a limit to the amount that an individual can invest in an ISA in any tax year.
As from 1st July 2014 new ISA limits came into force, as well as certain other relaxations in the regulations.
Up until 30th June 2014 the maximum amount that could be invested in an ISA during 2014/15 was £11,880. Of this amount, £5,940 could be invested into cash savings accounts, the remaining £5,940 having to be invested in stocks and/or shares.
From 1st July 2014 the maximum amount that could be invested in an ISA during 2014/15 is increased to £15,000. Also, within this overall limit, the limit on the amount that could be invested into cash savings accounts was removed. Therefore, the whole £15,000 can now be invested in a cash savings account, and any individual who has already reached the old cash ISA limit of £5,940 between 6th April 2014 and 30th June 2014 can now invest a further £9,060 before 5th April 2015.
These relaxations are important. Stocks and shares always carry a degree of risk, and this may be too much for certain savers. These individuals can now protect over double the amount each year in a tax free savings account.
All of the above limits apply to each individual. Therefore, a married couple or people within a civil partnership can now invest a total of £30,000 between them.