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New ISA rules may make the ‘5,000 miles for a Virgin ISA’ more attractive

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Above all the noise in the UK Government budget about pension changes, you may have missed the changes relating to Individual Savings Accounts, or ISA’s:

ISA’s will be renamed NISA’s (‘New ISA’s’)

From July 2014, the annual limit on (N)ISA contributions will increase to £15,000

There will no longer be restrictions on how this must be split between cash and equities / bonds

You will, for the first time, be able to move money from a ‘stocks and shares’ ISA into a cash NISA

That last point opens up an interesting arbitrage for some people, including myself and my wife.  Every year, we use our cash ISA allowance to the maximum.  We do not use the ‘stocks and shares’ part of our annual allowance because we have / had jobs which are City based – we already have enough of our future tied up in the well-being of the stock market!

However, I AM now going to open a ‘stocks and shares’ ISA in the current tax year, to use up my £5,760 allowance.  Why?  Because, after July, I can close it down, liquidate the assets and turn it into a cash NISA!  Effectively, going this route allows me to sneakily double my investment in a cash ISA for the 2013/14 tax year.

But which ‘stocks and shares’ ISA to pick?

As it happens, Virgin Money is offering 5,000 Flying Club miles to anyone who open a new FTSE Tracker ISA. See here for full details.

There are two ways to invest. You can either invest a lump sum of £1,000, or make a £75 monthly investment for at least six months. In either case, you must leave the account open for six months.

You hopefully don´t need me to remind you that this is an investment product and you could lose some of your capital – these miles are definitely not risk free!


The less risky option is £75 x 6 months = £450 invested. If you valued the miles at £50, you would still come out on top with a 10% fall in the market by the time you exit.

The £1,000 lump sum investment is clearly riskier – the value of the miles is wiped out with just a 5% fall in the market. As your entire £1,000 is invested on Day 1, you are also losing out on proportionately more bank interest as well.

You cannot open this ISA if you already have a ‘stocks and shares’ ISA for the current tax year. You can open one if you only have a ‘cash’ ISA for the current tax year.  The small print says that the offer is once per customer, although I know people who have opened one of these in earlier tax years and got the miles a second time.

This is certainly not one for totally unsophisticated investors.  However, if you don´t need the money back in the short term then you do at least have the flexibility to sit it out until the market gets back to your original investment level!

My plan is to open a Virgin Money ISA with my full remaining ‘stocks and shares’ allowance of £5,760 for the current tax year, and then close it down – transferring the proceeds to a cash ISA (by then they will be called NISA’s) – in exactly six months time.  If for some reason it is ‘out of the money’ at that point, I will simply let it run until it gets back to the original level.

How to earn Virgin Points from UK credit cards

How to earn Virgin Points from UK credit cards (April 2024)

As a reminder, there are various ways of earning Virgin Points from UK credit cards.  Many cards also have generous sign-up bonuses.

You can choose from two official Virgin Atlantic credit cards (apply here, the Reward+ card has a bonus of 15,000 Virgin Points):

Virgin Atlantic Reward+ Mastercard

15,000 bonus points and 1.5 points for every £1 you spend Read our full review

Virgin Atlantic Reward Mastercard

A generous earning rate for a free card at 0.75 points per £1 Read our full review

You can also earn Virgin Points from various American Express cards – and these have sign-up bonuses too.

American Express Preferred Rewards Gold is FREE for a year and comes with 20,000 Membership Rewards points, which convert into 20,000 Virgin Points.

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & four airport lounge passes Read our full review

The Platinum Card from American Express comes with 40,000 Membership Rewards points, which convert into 40,000 Virgin Points.

The Platinum Card from American Express

40,000 bonus points and a huge range of valuable benefits – for a fee Read our full review

Small business owners should consider the two American Express Business cards. Points convert at 1:1 into Virgin Points.

American Express Business Platinum

40,000 points sign-up bonus and an annual £200 Amex Travel credit Read our full review

American Express Business Gold

20,000 points sign-up bonus and FREE for a year Read our full review

Click here to read our detailed summary of all UK credit cards which earn Virgin Points

(Want to earn more Virgin Points?  Click here to see our recent articles on Virgin Atlantic and Flying Club and click here for our home page with the latest news on earning and spending other airline and hotel points.)

Comments (32)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Clive J says:

    Thanks, I may have a go at this with the minimum investment. Wouldn’t it be great if you could fund the ISA with 3V cards. A triple whammy !

  • Newbie says:

    I don’t have a virgin miles account, I am going to open one, however before I do is there any sign up offers or deals anywhere for opening one anybody is aware of?

    • oliuk says:

      There is a referral scheme called ‘miles more friends’ where you can earn a few thousand extra miles on your first flight.
      I would of course be happy to refer you 🙂

  • Danny says:

    Applied yesterday afternoon and the miles have already been posted today!

    • Rob says:

      Just checked and mine are there as well. Looks like its a once a week thing as I applied on Sunday.

  • Rob says:

    True – I would never put tens of thousands into an ISA with a 1% fee. However, as I only intend to keep mine for 6 months and then close it, I will come out ahead! It is also worth giving Virgin credit for ease of use – it is a doddle to apply and they are very fast with the paperwork and the miles.

    • oliuk says:

      Agreed – each year I open the virgin isa for the minimum amount to collect the miles, then after 6months just have it transferred over to my main longterm isa, where i generally also top up to the annual allowance. So far I have always made a bit of money with virgin, and they have always been fast and professional dealing with everything. I would be happy to buy more standard insurance and financial products from them if they offered them (with miles).
      I value the 5k miles at £50, so if you open the account for £1k you are effectively up 5% immediately.

  • Anon says:

    Great idea. Thanks so much for this Raffles!

This article is closed to new comments. Feel free to ask your question in the HfP forums.

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