The Budget brought with it some positive news for savers, not least the increase to the total ISA allowance from £11,880 to £15,000 from 1st July 2014, but better still allowing savers to invest the total amount into cash.
This surprise announcement has meant that cash ISA providers have been scrambling around to amend their current rules to allow savers to maximise the full allowance if desired.
The main problem arises with fixed rate ISAs, as traditionally fixed rate products, once closed for new business, restrict savers from adding to their investment. This poses a potential issue for those savers looking to fix their ISA now and top up later in the year.
So it’s reassuring to know that almost all providers have now announced that they will be relaxing their rules to allow savers to top-up.
However, as usual, it’s not straightforward.
The NISA brings a welcome boost for savers but it's not without its complications. Although it's great that the providers are relaxing the rules around topping up fixed rate cash ISAs, savers may be bewildered. There is a huge variation about when you are able to top-up.
Natwest/RBS allows just a couple of weeks on one of its ISAs, whereas some allow top-ups throughout the tax year. Many providers allow just one month for top-ups and some allow them until various dates throughout the year. Also some providers allow you to top-up at existing rates, while others require you to open a new fixed rate at the time.
As a result, many ISA savers may be waiting until the 1st July before even opening their cash ISA, missing out on tax-free interest in the meantime. But those who did opt for a fixed rate ISA earlier, in the hope of topping up later in the year may find themselves out of pocket by forgetting the top-up deadline.
Our FREE NISA guide not only spells out the changes to cash ISAs that will occur from 1st July, but also provides a handy table to remind savers of the top-up deadline imposed by the providers.