Skip to main content

An update on ISAs


Cash

These ISAs are the simplest form, but unfortunately at present paying poor returns and in most cases not keeping pace with inflation. Enjoys Financial Services Compensation Scheme Protection up to £85,000 per provider. The ISA limit for 2017-18 is £20,000.

Stocks and shares

All or some of the annual ISA allowance can be invested in stocks and shares. This can be done directly in shares of companies or in bonds, or through funds or investment trusts, which are funds that are traded on the stock market. Investors can also use 'passive' investments, which are low cost and track different markets, such as the FTSE 100. The ISA limit for 2017-18 is £20,000.

Junior

Junior ISAs are for those under the age of 18. Up to £4,128 can be saved into these ISAs in the 2017-18 tax year. At age 18 this money is then converted into an adult ISA, and the child takes control (and can do what they want with the money). The money cannot be withdrawn until age 18, unless the child is terminally ill. As with adult ISAs, the money can be split between cash or stocks and shares.

Lifetime

The Lifetime Isa has a dual purpose - to fund a first-time property purchase and save for retirement. From April 6 2017 you can put £4,000 a year into a Lifetime ISA, which will be topped up with a 25pc government 'bonus', making a total of £5,000. You have to be over 18 and under 40 to open an account but contributions - including the bonus - are paid until your 50th birthday.

If you invested the full amount from 18 to 50 you would receive £32,000 in government bonuses. However, you can only take out your cash penalty free from age 60 or if using it for a deposit on your first property. Cashing in early for any other reason - apart from terminal illness or death - will see a 25pc exit penalty applied. As with other ISAs, you can put money in cash or invest in funds and shares.

For the 2017-18 tax year only, the bonus will be paid at the end of the year. This means no penalty will apply to withdrawals but likewise a property purchase will not benefit from the bonus in that year. From April 2018 the bonus will be monthly.

Help to Buy

Since December 2015 first-time buyers have been able to save into Help to Buy ISAs. You can save £1,200 in the first month of opening an account and up to £200 a month afterwards. The Government tops up your savings by 25pc. The minimum it will add is £400 - so you must save £1,600 or more - and the top-up has an overall cap of £3,000.

A couple can open two separate accounts. There is a £250,000 limit on properties purchased (£450,000 in London), while the Lifetime ISA has a £450,000 limit nationwide. You will not be able to open a new Help to Buy ISA after November 30 th 2019. You can transfer a Help to Buy ISA into a Lifetime ISA in 2017-18 and it won't count towards the £4,000 maximum contribution for that year only.

Innovative Finance

Peer-to- peer savings, where investors lend money to individuals or businesses via an online platform, are currently subject to tax, although the income they generate qualifies for the personal savings allowance. But these investments can also be held inside an ISA - if the provider is regulated and authorised.

Flexible ISAs

If your ISA is classed as a flexible ISA (not all providers are obliged to offer this flexibility), it enables you to pay withdrawn money back into your ISA , without it counting towards your ISA allowance.

What’s an inherited ISA allowance?

Anyone whose spouse or civil partner died on or after 3 December 2014 is eligible for a one-off additional ISA allowance equivalent to the value of the deceased person's ISA at the time of death. This is referred to as an 'additional permitted subscription' or APS allowance, also known as an inherited ISA allowance.

Say, for example, that you saved up £50,000 in your ISA when you die. Your spouse will be able to make an additional contribution to their ISA of up to £50,000, in addition to their own ISA allowance for the year (£20,000 in the 2017-18 tax year).

Popular posts from this blog

Budget 2021 – Small Business Owners

The planned increases to Corporation Tax Rates and what these mean for small business owners. Who will be affected? The corporation tax ‘main rate’ (currently 19%) is scheduled to increase considerably to 25% by April 2023. A new ‘small profits rate’ is also being introduced for business which make less than £50,000 profit a year. The main rate will be applied to businesses making more than £250,000 profit a year, with a ‘tapering’ of the two rates between these amounts.  Those companies under this lower £50,000 threshold will find themselves relatively unaffected by the new measures.  Businesses which find themselves between these rates will arguably be affected worst, having smaller profits to pay the extra tax from. For these companies, particularly which find themselves just over each of the limits announced, or indeed the tapering limits yet to be confirmed; additional tax planning will become an essential exercise going forward. Fortunately, these same companies will have more op

Newsletter - Budget 2021

Here is a roundup of the Chancellor's 2021 Budget from yesterday. Finance & Taxation Pension Lifetime Allowance to be frozen Pensions to have access to ‘green investments’– FCA consultation to follow shortly No changes to rates of income tax, national insurance or VAT Personal income tax allowance to be frozen at £12,570 from 2022 - 2026 Higher rate income tax threshold to be frozen at £50,270 from 2022 – 2026 Stamp duty freeze extended for a further three months in England and Northern Ireland After this date, the starting rate of stamp duty will be £250,000 until the end of September. Stamp duty will then return to the usual level of £125,000 Corporation tax on company profits to rise from 19% to 25% in April 2023, with a taper Rate to be kept at 19% for about 1.5 million smaller companies 95% Mortgages The UK’s biggest lenders will be offering 95% mortgages guaranteed by the government from next month to help buyers with small deposits get on or up the property ladder. Sunak

Why are CPD and Qualifications important to us and our clients?

Continuing Professional Development (CPD) is activity undertaken to ensure our skills and knowledge are up-to-date. The Chartered Insurance Institute member CPD scheme provides a practical framework for ensuring development is addressed in a structured way to meets our personal and business needs and requirements of the CII as a Chartered professional body. CPD is a common requirement for qualified members of professional bodies. It reflects the fact that, in today's fast changing world, knowledge gained through qualifications quickly dates and, if you are to remain competent, you must continue to develop and enhance your knowledge. Equally, eligibility for and use of member qualification designations is not simply an indicator of study completed, but also of a commitment to subsequently keeping this knowledge current and being bound by a Code of Ethics. We believe it is essential to be part of this CPD programme and go beyond in studying CII modules, this allows us to: Build publi