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Time to act; the ISA 5th April countdown has begun

 

Now is the time to take advantage of the ISA and NISAs allowances for 2014/15 before they expire at midnight on the 5th April. The change in rules means that you can save or invest a much higher limit of up to £15,000 tax efficiently this tax year.

Don’t forget that the 5th April falls on a Sunday in 2015, which means it is even more important not to leave investing or saving into your ISA or NISA until the last minute.

Time to act!


In the 2014 Budget, Chancellor George Osborne announced the arrival of the NISA (New Individual Savings Account) which is a bolt on product to ISAs and became available on the1st July2014.

The NISA allows you to save or invest a much higher sum of £15,000 in cash, shares or a combination of the two, tax efficiently this tax year. If you have already invested into an ISA in 2014/15 you can transfer your money into a NISA to take advantage of the enhanced allowances and benefits. Your ISA provider may automatically carry out this transfer for you, but it is important to check before adding any additional money.

The NISA also introduced more flexible rules to ISA saving and investing. Gone are the restrictions of the old ISA that governed how much you could save into either cash or stocks and shares. With a NISA you can hold all of your allowance in cash, all of it investments, or a combination of the two. You can also switch your money between cash and investments any time you like. With an old ISA you could only transfer your savings in one direction from cash to stocks and shares, and not the other way round: the NISA is a much more flexible financial planning tool than its predecessor.

The NISA is an interim name, so we could differentiate between the old ISA and the new more generous and flexible measures given to the NISA in 2014/15. After the 5th April 2015, we will lose the name NISA and return to calling them just ISAs, but ISAs will have adopted the NISA rules as well as higher saving and investment allowances.

Are NISAs and ISAs any good?


Any monies which are held in cash savings or taxable investments are likely to be better off in an ISA or NISA if you’re a tax-payer. ISAs and NISAs are tax efficient accounts and many people use their allowances each year so that in time a large proportion of their wealth is shielded from paying tax on gains made.

What about my old ISAs? 


If you are worried about the interest rate or investment performance of your old ISAs, you can transfer them into better performing NISA or ISA account without losing their tax efficient wrapper. 

Is now a good time to review all of my savings and investments?


Yes, especially if you have held your savings and investment accounts for some time. It may be that you have money which is being saved for long term projects, such as retirement, that would be better off invested, rather than being held in cash. It is always a good idea to review your situation regularly, and re-evaluate why it is that you are taking risk with your capital, and to check your savings are still producing good returns. 

New ISA benefit for 2015/16 tax year…


In the 2015/16 tax year the ISA allowance will increase to £15,240. Another new benefit is that from 6 April 2015 the government will allow an additional ISA allowance for spouses or civil partners when an ISA saver dies. This new allowance will be equal to the value of the deceased saver’s ISA holdings on their date of death. This means that a surviving spouse or civil partner will be allowed to transfer their deceased spouse’s ISAs into their own name, whilst retaining their tax efficient wrapper.

If you are unsure about how to top up your ISA or NISA in 2014/15, or you want to talk about reviewing your investments and next year’s allowances please get in touch. We'd love to hear from you; please don’t hesitate to get in touch if you’d like any assistance or if you wish, just to have a chat. We'd love to hear from you, email letstalk@sanlam.co.uk.

Date issued: 06.03.15

Please remember any views or facts expressed above are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness. Any expressions of opinion are subject to change without notice. None of the information should be regarded as advice. Past performance is not a reliable indicator of future results. Investing involves risk and the value of investments and the income from them may fall as well as rise and is not guaranteed. Investors may not get back the original amount invested. Any tax treatment is dependant upon individual client circumstances and may be subject to change.

Sanlam is a trading name of Sanlam Wealth Planning UK Limited (Reg. in England 3879955) and English Mutual Limited (Reg. in England 6685913). English Mutual Limited is an appointed representative of Sanlam Wealth Planning UK Limited which is authorised and regulated by the Financial Conduct Authority.

Registered Office: St. Bartholomew’s House, Lewins Mead, Bristol, BS1 2NH.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.