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Why delay arranging your new ISA?

The new ISA allowance for 2015/16 became available on 6th April, giving UK residents the chance to put more of their money into tax efficient savings accounts and investments.

Yet this year, like so many before, the flurry of activity came not at the start of the new tax year but at the end of the last, when there was a dash to get money invested before the 5th April deadline. 

It is always a mystery why so many people leave their ISA investing to the end of the tax year, instead of doing it at the start. As soon as money is invested or saved into an ISA the money starts to benefit from being in a tax efficient wrapper. This means that any interest is paid free of tax and dividends paid from stocks and shares ISA’s have a non-refundable 10% tax deduction. We are already 2 months into this tax year, with the months going by rather quickly.

It makes no sense to leave money in accounts which are tax paying all year only to transfer into an ISA at the last possible moment, after all why would you pay tax on interest or income from your savings/investments when you don’t have to?

Financial Planning can sometimes be about conquering human nature. This means thinking through your goals and objectives and working out the financial steps and taking action to get there. If you were a last minute ISA investor this year it may make sense to change the habit and get ahead of the game.

This year, there are some additional changes to ISAs which were announced by George Osborne in his 2015 Budget which are of extra benefit. ISA allowances increased on 6th April 2015 this year, as did the JISA and Child Trust Fund subscription limits.

Also announced was a proposed flexibility to ISAs. The Chancellor announced that savers will soon be able to withdraw and replace money in the same tax year without losing the tax advantages. This development should be launched in autumn 2015, following consultation with ISA providers. 

To find out more about investing into an ISA please do not hesitate to get in touch. We'd love to hear from you. Email letstalk@sanlam.co.uk.

Date issued: 17.06.15

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.