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BUDGET 2014: New £15,000 Isa limit

New Isa rules mean stocks and shares investors can invest in cash, retail bonds and, eventually, peer-to-peer loans.

From 1 July 2014, individual savings accounts (Isas) will be reformed into the New Isas (Nisas), with a new, more generous, annual limit of £15,000.

Nisa investors will have the option to save the whole annual allowance of £15,000 into cash, stocks and shares, or any combination of the two. Under the Nisa rules, you will also be able to transfer previous years' Isa savings freely between stocks and shares and cash if you wish.

This brings an end to the absurd rule that only allows savers to transfer cash Isas into stocks and shares and not the other way round. It will allow investors to better manage their exposure to risk, especially when they're nearing retirement.

The government will also raise the limits for Junior Isas and Child Trust Funds from £3,700 to £4,000, although, disappointingly, it has not brought forward the planned merger of CTFs into Jisas from April 2015.

From 1 July 2014, restrictions on corporate bonds and gilts that must have at least five years to run to maturity at the time they are first held in an Isas will be removed. This will mean that short-dated securities (such as retail bonds) acquired after this date can be held in a stocks and shares Nisa, provided the requirements in relation to listing are satisfied.

Also from 1 July 2014, investors will be able to acquire core capital deferred shares issued by building societies in a stocks and shares Isas.

In addition, from that date, cash held in a stocks and shares Nisa need not be held for the purpose of investing in qualifying investments. Any interest arising on this cash will not be subject to a flat rate charge of 20 per cent.

The government intends to enable peer-to-peer loans to be held within a Nisa and will consult on how to implement this later this year. The government will also explore extending Nisa eligibility to debt securities offered via crowdfunding platforms.

Jason Chapman, managing director at discount broker Willis Owen, said: "We'd like to see the Treasury go further in future. In a recent poll, over half of our customers said they invest in an Isa to create income in retirement. Yet next year's annual Nisa allowance will be £15,000, while the tax-free allowance for pensions will be £40,000. If the government is serious about boosting the national culture for saving, why not commit to increasing the Isa allowance further over the next few years?"