ISA’s – Individual Savings Accounts Advice, Exeter, Plymouth & Devon
Individual Savings Accounts, ‘AKA’ ISA’s & now NISA’s
Minimising your Tax bill or paying less tax is high on all our priorities and none more than when managing your savings and investments. Your annual ISA allowance is just such an opportunity to just that. Using your Annual ISA allowances will ensure that any interest or growth earned on your savings is Tax Efficient to maximise your growth prospects.
What is an ISA? or a NISA
- ISA is short for ‘Individual Savings Account’.
- ISAs are tax-free savings and investments, which means all returns from your ISA will be free of both UK Income and Capital Gains Tax
- There are two types of ISA – cash ISAs and stocks & shares ISAs. Investment products such as authorised unit trusts, can be held in the stocks & shares ISA.
- In a cash ISA, you can save in a cash deposit account.
- Stocks & shares ISAs are a medium (at least 5 years) to long term (over 10 years) investment.
- The ISA limits change annually, and typically inline with inflation, so there are different limits to consider
- Cash ISAs are available to all UK residents aged 16 or over.
- Stocks & shares ISAs are available to all UK residents aged 18 or over.
- You are only allowed to contribute to one cash and/or one stocks and shares ISA per tax year.
- Junior or childrens ISA’s are also available as to are Child Trust Fund Investments
- Contributions to an ISA can be monthly or by lump sum investment
- From the 1st July 2014, the Government increased the allowance significantly and renamed it a NISA (simply NEW ISA)
ISA Allowances for 2013-2014
Investors & Savers could save up to £11,520 in the previous 2013-2014 tax year with no further personal income or capital gains tax making this Investment or Savings Plan a valuable part of your financial planning. £5,760 in to a CASH ISA or the full amount in to a Stocks and Shares ISA. A Child’s ISA allowance had been increased to £3,720 for the 2013-2014 year
NISA Allowances for 2014 & 2015
From July 2014 the NISA allowance has been increased to a total of £15,000 for both the Cash element and the Stocks and Shares Element of an ISA (£15,000 in total per person) You can have a combination of the two NISA’sin any amount, but not more than the prescribed limit of £15,000. The Children’s NISA allowance for 2014 – 2015 has been increased to £4,000
Stocks and Shares Isa
A stocks & shares ISA is a medium to long term investment, typically 5-10 years.
You can invest up to the maximum allowance into a stocks & shares ISA (less any amount invested in a cash ISA) in the current tax year and you can invest in a range of either equity or fixed interest based funds, allowing you to select the funds best suited to your needs.
In the case of a stocks & shares ISA, tax efficient means any profit is free of Capital Gains Tax and there is no further liability to personal Income Tax.
By investing your own personal allowances each year in to an ISA, and maximising your ISA & NISA allowances, a person could have approximately £65,800 saved away TAX free (excluding any growth) if a couple did this then its obviously doubled to well over £100,000 – See the table below:
|Year||CASH||Stocks and Shares|
|2009||£ 3,600||£ 7,200|
|2010||£ 5,100||£ 10,200|
|2011||£ 5,340||£ 10,680|
|2012||£ 5,640||£ 11,280|
|2013||£ 5,760||£ 11,520|
|2014||£ 15,000||£ 15,000|
|Totals||£ 40,440||£ 65,880|
If you had maximised your PEPS and TESSA’S previously, this tax free savings haven would be even greater! To make sure you use your ISA allowances wisely, get in touch for a review of your options at any time.