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Budget 2014: ISA and Junior ISA limits increased in ‘dramatic’ revision of system

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Chancellor George Osborne has announced "dramatic" changes to ISA and Junior ISA rules.

Cash and stocks and shares ISAs will be merged to create a new vehicle called a New ISA (NISA) and the annual tax-free limit will be raised to £15,000 from 1 July.

Savers will have complete flexibility over how they choose to save and invest, within the overall limit. They can, for example, hold £15,000 in cash.

Investors were previously allowed to invest £11,520 per year into a stocks and shares ISA, and £5,760 in a cash ISA, up to an overall limit of £11,520.

For the first time ever, savers will also be able to transfer previous years’ funds from stocks and shares ISAs into cash ISAs.

Delivering his fifth annual Budget, Osborne said: “I want to help savers by dramatically increasing the simplicity, flexibility and generosity of ISAs. Twenty four million people in this country have an ISA. And yet millions of them would like to save more than the annual limits.”

Danny Cox, head of advice at Hargreaves Lansdown, said: “One single allowance will mean that stocks and shares ISA holders who currently hold cash will no longer be subject a 20% deduction for tax.”

The amount of money that can be put in to Junior ISA has also been raised to £4,000, up from £3,720.

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.

Under previous rules, only corporate bonds and gilts with a 5 year plus maturity could be held in an ISA.

The government will also explore extending the ISA regime to include debt securities offered by crowdfunding platforms.

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