Will you make the most of the latest ISA changes?

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ISAs have undergone significant changes in recent years, and the rules are now much simpler when it comes to investing in these popular ‘tax-free’ savings vehicles.

Individuals can invest in any combination of cash or stocks and shares up to the overall annual subscription limit of £15,240 in 2015/16. However, a saver may only pay into a maximum of one Cash ISA and one Stocks and Shares ISA each year. You have until 5 April 2016 to make your 2015/16 ISA investment.

Meanwhile, a tax-free Junior ISA (JISA) is available to all UK resident children under the age of 18 as Cash or Stocks and Shares product or both. Total annual contributions are capped at £4,080. Funds placed in a JISA will be owned by the child but investments will be locked in until the child reaches adulthood. If a child has a Child Trust Fund account this can now be transferred into a JISA.

The new Help to Buy ISA

Alternatively, those wishing to save for their first home may benefit from the new Help to Buy ISA, which has been available from 1 December 2015. The account enables first time buyers to save monthly deposits of up to £200, with an opportunity to deposit an additional £1,000 when the account is first opened.

The Government will then provide a 25% bonus on the total amount saved, including interest, capped at a maximum of £3,000 on savings of £12,000, which is tax-free. The bonus can only be put towards a first home located in the UK with a purchase value of £250,000 or less or up to £450,000 in London. An individual may only subscribe to one Cash ISA per year, so an account holder cannot subscribe to a Help to Buy ISA and a Cash ISA.

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