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New Tax Year, Your New ISA Allowance


If you have savings or investments held in accounts which are not Individual Savings Accounts (ISAs), then now is the time to consider moving your money. Thursday 6 April marks the start of a new tax year and with it a new ISA allowance for all eligible UK adults, allowing you to save or invest up to £20,000 (2017/18) this year without paying any tax on the interest earned or any returns you may make.  If you don’t make use of your annual ISA allowance then it is likely that you are paying tax on your savings and investments when you don’t need to. 

ISAs are now more generous in their allowance and more flexible in their rules than ever before and this means that they are being used much more widely as a financial planning tool. 

ISAs can now be used to save both for short term goals such as a wedding or a deposit for a house, and also longer term goals such as building up a portfolio of retirement investments.

ISAs are easy to open and the rules surrounding the accounts are simple to understand. If you are considering investing money then it may be beneficial to use a financial adviser to help guide your choice of funds. Investments range in their level of risk versus reward, so the more risks you take in your investment choice the larger your potential gain, or potential for loss. Getting this balance right can require experience and expertise. A financial adviser will help you choose investments or funds for your ISA which suit your individual needs. In particular, they will consider your attitude to risk (how comfortable you are at the possibility of losing some of the money you have invested), and the reason you are saving, as well as the length of time you plan to leave the money invested.
If you didn’t use your ISA allowance in the last tax year (2016/17) then it is too late: the use it or lose it rule applies to this tax benefit from HMRC.

5 reasons you should move your money into an ISA

 

  1. You can save or invest £20,000 in cash, shares or a combination of the two, tax efficiently this tax year (2017/18)
  2. The rules surrounding ISA saving and investing have become more flexible. Gone are the restrictions of the old ISA that governed how much you could save into either cash or stocks and shares. You can hold all of your allowance in cash, all of it investments, or a combination of the two.
  3. You can also switch your money between cash and investments any time you like, although money which is invested should be money that you are prepared to hold for the long-term, at least five years. The value of investments can rise and fall, so the longer you leave money invested, the more time there is to even out the rises and falls of the stock market to provide smoother returns.
  4. You can switch providers anytime you like. This means you can transfer your old ISAs, from as far back as 1999 into better paying cash or equity ISA accounts, even if this is with a new provider. Make sure you arrange a transfer of accounts, rather than withdrawing the money, so your money retains its ISA tax wrapper.
  5. You will be able to leave your ISA portfolio to your spouse or civil partner on death and the money will keep its tax efficient wrapper. This is a new rule, and makes ISAs even more versatile. 

To find out more about investing into an ISA get in touch with your financial adviser, if you don't have one please get in touch, we will be happy to help letstalk@sanlam.co.uk.

Date issued: 11.04.17

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.