In his Budget, the Chancellor announced the annual investment limit for the NISA will be £15,000 a year, almost three times the current limit for saving in cash ISAs. From 1 July 2014, existing ISAs will automatically become a NISA, with the higher limit and more flexibility. Thereafter savers can then add further money to either a cash or stocks and shares NISA, up to the new £15,000 limit.

From the same date, savers will also be able to transfer money from a stocks and shares NISA to a cash NISA, the first time this has been possible.

James Hender, partner in the  private wealth group at Saffery Champness said:  ‘By allowing greater flexibility in swapping ISA investments into or out of cash, the Chancellor has solved one of the key problems faced by some ISA savers who wanted to reduce the investment risk in their portfolios but were prevented from doing so by the rules.’
In addition, the Chancellor announced that ISA eligibility will be extended to peer-to-peer loans, and all restrictions around the maturity dates of securities held within ISAs will be removed. The government is also to explore extending the ISA regime to include debt securities offered by crowdfunding platforms.

Nick Sandall, lead financial services partner at Deloitte, said: ‘Increasing the attractiveness of peer-to-peer lending should help to increase the supply of credit to smaller firms. Small businesses that want to expand and are keen to explore alternative sources of finance may find ISA investors are another source of finance. However, consumers investing in this sector will need to understand that the risks are higher compared to saving in deposit-based accounts.’

Other investment breaks in what the Chancellor dubbed ‘a Budget for savers’ include  cutting the current 10% tax rate for the first £2,790 of savings income above the tax-free personal allowance to 0% and increasing the band of savings income subject to the 0% rate to £5000.

The Budget also contained news that National Savings and Investments (NS&I) will launch a choice of fixed-rate, market-leading savings bonds for people aged 65 or over, available from January 2015 and allowing inflows of up to £10bn.

Chris Sanger, EY head of tax policy, said: ‘Those pensioners with money to invest will benefit.  First, the introduction of a pensioners’ bond paying market rate interest will allow those over 65 to potentially access a higher rate of return. The Budget assumes an interest rate of 4% for a 3-year bond with a likely investment limit of £10,000.’

‘The Chancellor has also abolished the 10% savings rate replacing it with a tax free band for investment income for those with low income.  This effectively means that those with incomes under £15,000 will pay no tax on their investment income - a measure likely to be of most benefit to those in retirement with modest savings,’ Sanger said.

There is a Treasury fact sheet on the new ISA here: .  https://www.gov.uk/government/publications/the-new-isa-factsheet