The NISA looks nicer than the ISA
It was dubbed a ‘budget for savers’, and was certainly about as exciting as a Budget can get!
Among the key announcements was the New ISA (or catchily named ‘NISA’), increasing the annual ISA allowance to £15,000 per person per tax year, and the equalling of this allowance for both cash and stocks and share ISAs (or any combination of the two). Most people have focused on the increase in the allowance, but there is another change that could really help as people look to reduce the investment risks they face, for example in the run up to retirement, and that is the ability to transfer stocks and shares into cash in the NISA.
We see this as a positive move, as we see ISAs as forming a key part of retirement planning. Many (but by no means all) people look to reduce the amount of money they hold in higher risk investments, including stocks and shares, and increase the amount of money they hold in lower risk investments, including cash, as they near or reach retirement. Previously, to transfer a stocks and shares ISA to cash, you would have had to take it out of the tax efficient environment. In the future, it will be possible to leave the money to grow in an ISA which could hold any proportion of cash and stocks and shares as you like.
These changes will no doubt increase the attraction of the ISA further. Of course, with increased flexibility comes more choice which for many only complicates decision making, and leads to the question – ‘so what should I do?’ That’s where good financial planning adds real value, because the right answer to that question should consider your overall circumstances, needs and goals – not just savings or investments in isolation.