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Two thirds of Brits oblivious to new ISA rules

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Two thirds of Brits are still unaware of the new ISA - or NISA - limits, which are set to come into force from 1 July, according to a survey.

Research by MoneySuperMarket found that 63 per cent of Brits are oblivious to the fact that new rules will come into force next week.

This percentage rises to 68 per cent of 18-34 year olds and 70 per cent of 35-54 year olds.

An additional 24 per cent know the NISA is being introduced but do not understand what the rules mean.

The NISA will allow savers to save cash and stocks & shares in one account and transfer funds freely between asset classes. The new product will carry a tax-free allowance of £15,000, up from the current limit of £11,880.

Kevin Mountford, head of banking at MoneySuperMarket, said: “I am surprised that so many people are unaware of the introduction of NISAs. There is also a clear lack of understanding among many as to the rules and benefits of saving into one. The launch of NISAs is brilliant news for savers. However, with so many people unaware of these new rules, more needs to be done to ensure that people will actually reap the rewards.”

According to the survey, demand for NISAs varied by region. While half of Londoners said they were likely to save into one from 1 July, just 38 per cent of those living in the South West and 37 per cent of Yorkshire and the Humber residents said the same.

More than one in four said they will save more because of the new ISA rules, including two-fifths of 18-34 year olds.

However, current cash ISA rates will not do new savers justice, according to MoneySuperMarket, with many of the best rates reserved for existing customers.

The best rate accessible by new customers is 2 per cent with the Coventry Building Society Branch Instant ISA, while the best buy overall is 2.25 per cent for exiting Harpenden Building Society customers. The average cash ISA rate from the top five providers is 1.63 per cent.

Mountford said: “Although it is tempting to be attracted to headline rates, it is also clear that savers need to look at the finer detail of the account, such as whether it offers an introductory bonus or accepts transfers in. Also savers need to make sure that they follow the NISA switching rules, otherwise their savings could lose their tax-free status.”

He concluded: “It’s been a bleak few years for savers, but the simplification of ISAs to NISAs and the huge increase in the tax-free allowance could make a difference.”

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