From today millions of savers across the country will benefit from a near trebling of the cash Isa limit; from £5,760 in 2013-14 to £15,000 in 2014-15.
The changes were announced by the Chancellor in March's Budget when he also made Isas more flexible by allowing savers to switch their nest-egg between shares and funds and savings accounts.
Up until now you've only be able to move money held in an Isa from savings accounts to equity-based investments. From today you'll be allowed to move money back the other way, if you wish.
Savings institutions are expecting massive demand as figures released last week suggest people have been delaying using the current 2014-15 Isa allowance until the new higher limits and greater flexibility come into force.
Figures published by the British Bankers' Association showed a massive drop in the amount people have been stashing in Isas in the past three months – savings were £5.3bn, down by more than a third from the same period in 2013.
But there have also been fears that banks - caught out by Osborne's surprise announcement in the Budget - haven't been ready to offer the new Isas.
Yesterday the British Bankers' Association was keen to dispel that rumour.
A spokesman for the BBA said: “We have been working hard to get ready for the new ISA regime and been holding weekly calls with our members, fund managers and other providers to prepare for these changes.
“Staff have received specific training and banks have put plans in place to make sure they are ready if there is a surge of customers wanting to move from stocks and shares products into cash – or vice versa.“
Savers have also been put-off stashing money in the tax-free wrapper by record low savings rates. The average cash Isa interest rate is now just 1.58 per cent, according to Moneyfacts. A year ago it was 1.74 per cent.
”People have also been looking at alternative homes for their savings, such as peer-to-peer platforms and a number of popular retail bonds,“ according to Andrew Hagger of MoneyComms.
But the government hopes that today's new flexibility will reverse that. George Osborne said: ”Today’s introduction of the New ISAs is a big boost for millions of people, giving them greater economic security by putting aside money in savings.”Reuse content