15 Aug 2014

Maximised Your ISA Allowance In April 2014? Maybe Not!

Maximised Your ISA Allowance In April 2014? Maybe Not!

Colin Scott, Independent Financial Advisor, explains the changes to the ISA regime which will benefit all.

Colin Scott, Independent Financial Advisor, explains the changes to the ISA regime which will benefit all.

If you are one of the many people who fully utilises your ISA allowance in April year after year then well done, however this year there is an added bonus. The available allowance on 6th April was £11880, however in his budget of March 2014, Chancellor George Osborne announced changes to the ISA regime which will benefit all. The Chancellor announced that he was to introduce a New ISA (or NISA for short) from July 2014. These new rules are the most radical overhaul to ISA rules since they were introduced in 1999, and signify the Chancellor's intention to encourage individuals to save and invest for their future. These changes came into force on 1st July 2014.  A summary of the changes are noted below: 

New ISA limit

The New ISA allowance (the amount you can invest each tax year) has risen to £15,000 from £11,880 prior to 1 July 2014

Tax-free interest in Stocks & Shares NISAs

You have always been able to hold cash in a Stocks & Shares ISA, but any interest is in effect paid net of basic rate tax. Under the new rules interest on cash held in a New Stocks & Shares NISA is completely tax-free.

Improved transfer options

You can now transfer from a Stocks & Shares NISA to a Cash NISA, and vice versa. Under previous rules you could only transfer from a Cash ISA to a Stocks & Shares ISA

Improved flexibility

Under the new rules you can split the NISA allowance as you wish between a New Cash ISA and New Stocks & Shares ISA

In summary the Government have opened up a further £3120 allowance which can be invested free of tax and in these times of low interest rates in the bank/building society where inflation is outstripping the returns offered this extra allowance is great news. 

As noted above you can utilise your ISA allowance in Cash or Stocks and shares, which way you should go depends on your own personal circumstances but as with all things financial advice should be sought from a suitably qualified adviser before you make your decision. 

There are a myriad of options out there for clients to pick from so how do you know if your ISA is actually the best one for you. A meeting with one of Aberdein Considine’s Independent Advisers will allow you to review your existing ISAs, check your own attitude to risk, assess what you are looking to do and this will allow you to make an informed decision as to what to do next. 

ISA allowance input periods run from 6th April to 5th April the following year so if you don’t utilise your allowance it is gone, likewise the additional £3210 allowance needs to be invested prior to the 5th of April 2015. So use it, don’t lose it! 

Colin Scott, Independent Financial Advisor

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