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Use your NISA allowance now before you lose it


Paying tax on your savings and investments is always irritating, even more so for those who hold money in cash accounts and are receiving precious little in interest paid.

6th April 2015 signifies a new tax year and with it provides a fresh NISA (New Individual Savings Account) allowance for UK citizens, allowing us to save and/or invest up to £15,240 tax efficiently in 2015/16. 

What is important is that you make sure you use this year’s NISA allowance (£15,000) by 5th April, because if you don’t use this current year’s allowance, you will lose it at the stroke of midnight. There is no carry back option when it comes to investing or saving into a NISA.

In the 2014 Budget, Chancellor George Osborne announced the arrival of the NISA which replaced the ISA, allowing you to save or invest more money, more flexibly. This means that you can protect more of your savings and investments from paying tax on interest, income or gains made, than ever before.

Gone are the restrictions on how much of your NISA allowance you can save into either Cash or Stocks and Shares that governed the ISA; with the NISA you can hold all of your allowance in cash, or all of it in investments, or a combination of the two up to the overall annual allowance. 

You can only open one Cash and one Stocks and Shares NISA per tax-year; however you can switch your money between the two types of accounts. With the old ISA, you could only transfer from a Cash ISA to a Stocks and Shares ISA, and not the other way, making the NISA a much more flexible financial planning tool than its predecessor.

Added NISA benefit for 2015

One of the new benefits outlined by the Chancellor last year is that a NISA could be inherited tax-free by a surviving spouse or civil partner, with the survivor being allowed to retain the inherited ISA in its tax efficient form without it affecting their own allowance for that year. This effectively allows the survivor to have an increased ISA allowance in that tax year – their own full allowance plus an amount equivalent to the value of the deceased’s ISA at the date of their death. 

Exactly how this will work in practice is yet to be defined, with rules still awaited from HMRC, but it is a step in the right direction for savers. 

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 different NISA accounts without losing their tax efficient wrapper. This will not affect or use your current NISA allowance. Remember, this only works if you are transferring ISAs – don’t withdraw the money with the intention of setting up a new ISA as this will eat into the current year’s allowance!

What's happening to Junior ISAs (JISAs)?

Like the NISA, the JISA is also getting an increased allowance – with the current £4,000 (2014/15) annual allowance rising to £4,080 for the 2015/16 tax year. This can be used to save or invest for the under 18’s, in either Cash or Stocks and Shares, and like the NISA, this can be in whatever proportions you choose. The main difference between the two being that the money cannot be withdrawn from a JISA until the age of 18, providing a tax efficient way to save for a child or grandchild’s future.

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

Yes, especially if you have held your savings and investment accounts for some time or if your circumstances are changing. It may be that you have money which is being saved for long-term plans, such as retirement, and would be better off invested rather than being held in cash or it may be that investments you arranged some years ago are not performing as you hoped, or are taking more risk than suits your current circumstances. It is always a good idea to take stock of the situation and review potential risks with your capital and investments; a Wealth Planner can help with this. 

To find out more about NISAs and how they can help you, please do not hesitate to get in touch by emailin letstalk@sanlam.co.uk.

Date issued: 05.02.15

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.