New Isas allow more tax-free saving


%VIRTUAL-SkimlinksPromo%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 tomorrow.

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. 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, comparison websites warned that the typical potential returns on offer have worsened since Chancellor George Osborne made the announcement in spring.

Rachel Springall, spokeswoman for, said that since March, the average rate on offer on a one-year fixed-rate Isa has fallen from 1.58% to 1.48%. The typical rate on a variable cash Isa has
fallen from 1.26% to 1.21% over the same period.

She said that by comparison, rates on accounts for which tax is payable have remained broadly unchanged in recent months, with the average one-year fixed bond consistently paying around 1.42%.

Ms Springall said: "The falls in rates will likely cause much disappointment for savers who did not see a fruitful Isa season this year and have pinned hopes on the new limits to provide new deals so they can boost their income.

"Challenger banks appear to be leading the way with decent Isa deals lately, Virgin Money launched a market-leading one-year fixed Isa paying 1.76% which accepts transfers in, they also launched an easy access Isa, allowing transfers in, paying 1.50% which sits in the top five best deals.

"In addition, Aldermore launched a two-year fixed Isa paying 2% and although it's a fixed rate it will allow access subject to an interest penalty and accepts transfers in."

She continued: "Some building societies are reviewing their tax-free range ready for July, such as Leeds Building Society who is launching an innovative Isa builder paying 2.00% fixed which will allow customers to gradually deposit more each month until it hits the £15,000 mark.

"This is a great way for savers to steadily increase their savings pot and treats customers very differently compared to some providers who are only giving a small window of opportunity to invest in its fixed range."

Ms Springall said that if people are waiting to see if better Isa deals start springing up from July, they should remember to make sure that any transfers in they want to make from other Isas stay within their "tax-free wrapper" rather than simply withdrawing the cash to deposit elsewhere, as the funds will then lose their status of being ringfenced from the taxman.

Kevin Mountford, head of banking at, said: "The current rates on offer are stagnant and uncompetitive."

He said savers will need to be prepared to shop around to get the best deals. Research conducted by MoneySupermarket earlier this month found a widespread lack of awareness about the new Isa rules.

Nearly two-thirds (63%) of more than 2,000 people surveyed said they were unaware that the new rules kick in this week. However, one third (35%) said they are likely to use a Nisa as a result of the changes.

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.

12 ways to save £10,000 in 2014
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New Isas allow more tax-free saving
Mortgage rates are low at the moment, but even if you feel that your mortgage is a pretty good deal already, for a lot of borrowers there are better rates to be had. It's crucial to get the sums right – high upfront admin costs from a new lender or large early repayment fees from your existing mortgage provider could wipe out any savings. But, says David Hollingworth of brokers London & Country: "If you have an average standard variable rate (SVR) of 4.75%, a borrower with a £150,000 repayment mortgage over 20 years would pay £969.34 each month. Switching to a two-year fix with Norwich & Peterborough BS at 1.99% with £295 fee, free valuation and free legal work for remortgage would cut the payment to £758.11 a month, saving £211.23p.m." Over a year, that would mean a saving of £2,240, even with a £295 up front fee, and £2535 in following years.
Potential saving: £2,535
Your home and contents insurance may be costing more than it needs to. Gocompare.comdata shows that 25% of customers who provided their buildings and contents insurance renewal price saved up to almost £160 by changing to a new provider.
Potential saving: £160
With today's high cost of fuel, running a car is an expensive business. For a lot of people, particularly where public transport is sparse, giving up a car altogether is too big a challenge. But perhaps you could use it less, and take steps to bring down the cost of driving when it's unavoidable. The Energy Saving Trust says that just keeping your tyres pumped up correctly can save £31 a year, and turning off the air conditioning can save £77. Follow all the advice on the Energy Saving Trust's app, such as lift sharing and keeping your speed down, and the organisation claims you could save as much as £554 a year for a medium car covering medium mileage.
Potential saving: £554
If you haven't changed car insurer recently, the chances are you could save a lot of money by doing so now. According to research from Consumer Intelligence for, in October 2013, 51% of consumers could save up to £242.55 by moving to a new insurance provider. There are plenty of comparison sites to try, including AOL Compare, so it really doesn't take long to find a cheaper deal.
Potential saving: £243
Start by finding out whether you could get a cheaper deal from a different energy supplier. If you haven't changed in the past, you probably can. According to, you could save around £309 a year just by switching to a cheaper deal (based on customers who switched energy supplier for both gas and electricity (dual fuel) using the Energylinx platforms between 1 July and 30 September 2013).

Over the long term, there are plenty of ways to bring down bills that involve a relatively large outlay up front, such as ensuring your home is properly insulated. But just cutting your current energy use can have a huge impact on your energy bills. Some of the steps you can take are just a question of habit changing, such as switching appliances off instead of leaving them on standby. The Energy Saving Trust reckons the average household could save £50 and £90 a year just by unplugging or switching off at the socket. And turning down the washing machine temperature to 30 degrees, using a washing up bowl instead of leaving the tap running and only putting as much water in the kettle as you need can save you as much as £55 a year. Draught-proofing will save another £55, and proper 270mm loft insulation could save you up to £180 a year – taking into account the cost of fitting it the savings will take a couple of years to kick in.
Potential saving: £689 (far more if you take all the right steps in the home)
According to the NHS, most people who quit smoking save almost £2,000 a year. On top of that you get to feel healthier. What's not to love?
Potential saving: £2,000
Or at least, make your own. If you work in a town or city, the temptation to pop in and get a coffee can be strong. There's something comforting about sipping a hot coffee from those nice warm paper cups as you gear up for the working day. But if you stop to add up what it costs (including the cup), it may leave you cold. A Starbucks medium (OK, tall) latte costs £2.60 on the Strand in London. If you have one of those five days a week, 46 weeks a year (allowing for four weeks holiday), that means you are spending close to £600 – a tall price for a caffeine fix. If you make your own, a Bodum coffee maker costs £20 and a kilo of coffee costs around £13 and will make roughly 120 – 140. Missing the cup for the walk to work? Buy a Thermos mug for around £10. For £43, plus the price of milk, you can have coffee on the go all year round.
Potential saving: £557
It's a familiar scenario for many well-intentioned would-be gym bunnies. You sign up super motivated. You buy new workout gear, perhaps you work out regularly at the start. But then something – a holiday, a nasty cold, late nights at work – breaks your momentum and you stop going to the gym. Eventually your workout clothes lounge around in the cupboard while the gym keeps your bank balance trim by taking that direct debit each month. Gym memberships vary, but if you pay £80 a month for full membership, that's £960 a year's worth of good intentions. Invest in some proper running shoes – you can spend a fortune but specialist shop Run and Become has decent shoes for £50 – and hit the road. Need motivation? Download a free app such as Couch to 5k to get you started and track your progress as you get fitter.
Potential saving: £910
The range of mobile tariffs can be baffling. Many people end up on the wrong deal, perhaps paying for call time or extras they don't really need or use. There are a number of online tools and apps you can use to check your bill is not too high, such as Billmonitor and Mobilife. Enter your existing details and see if you could save money. In 2012, Billmonitor reckoned 26 million consumers in Britain were paying over the odds by as much as £164. The savings you could make will vary hugely, but it's certainly worth taking a look to see what you could save.

Apps like Viber and Whats App are also worth a mention as they allow you to text and call (Viber only) other users for free who have the apps on their smartphones. Whats App has ayearly subscription fee of around 65p, but the only other cost is the data on your smartphone plan if you're using 3G.

And when it comes to your broadband and home phone, it pays to find out if you are on the best deal. Dominic Baliszewski, telecoms expert at says: "Our own analysis has highlighted time and time again that a high proportion of customers do not actually switch broadband regularly enough to benefit from better pricing, which is crazy when you consider that switching can save you over £200 from your annual bill. Switching levels for broadband are woefully low when compared with energy or insurance services."
Potential saving: £364
In the UK, households throw away an estimated 25 meals each month, worth a total of £60 a month or £720 each year. Avoid buying too much food, even when it seems like you are saving money. Try not to 'take advantage' of bulk buy deals you may not use, make good use of your freezer for fresh foods rather than putting them in the fridge and forgetting them, and change a few of your shopping and eating habits and you may save money.

Make a list and stick to it. Shopping online can help you avoid temptation, and if you do your shopping on, you could save even more. Enter your items as you would on a supermarket site, and it will find the cheapest supermarket for your needs saving on average £17 a shop, according to the site. On a weekly basis that makes £884.

Growing your own vegetables can also save money, although the set up costs can be relatively high if you are starting from scratch. But some foods are cheap and easy to grow, even if you have little space. If you are in the habit of buying bagged salad, you could easily save a significant sum by growing your own. Jane Perrone, gardening editor of the Guardian and author of The Allotment Keeper's Handbook, says: "The materials to grow your own probably cost something shy of £20 a year, for seeds and compost mainly - I usually use recycled containers." A standard bag of salad from a supermarket costs around £1, so if you would usually buy one bag a week, you would spend around £52 a year.
Potential saving: £1,636
A Sky Sports bundle costs £43.50 a month, that's £522 a year. It's enough to take you somewhere sunny on holiday. It's enough to buy a whole new wardrobe full of clothes. Or, more importantly, several weekly food shops. Whatever else you could do with that money, it's certainly enough to make you think twice about whether or not you want to keep paying those subscription fees.
Potential saving: £522
You might not be able to pay your credit card off straight away, but you can cut the cost. If your credit card has a rate of 18.9% and you have a balance of £5,000, then you could save £472 by doing a balance transfer to a credit card with a 0% introductory deal for the first six months.
Potential saving: £472

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