Did you know…… The ISA allowance for 2017/18 will be £20,000.
For those of you who are not aware, the Individual Savings Account (ISA) allowance is the annual limit set by the Government to specify how much money can be saved or invested into a cash and/or stocks and shares ISA.
For the past two tax years the ISA allowance has been stuck at £15,240 but finally, from the 6th April 2017, it will be increasing to £20,000. This is great news for savers. The growth within a stocks and shares ISA is extremely tax efficient and only currently subject to 10% tax on dividends. There is no Capital Gains Tax (CGT) to be paid on encashment.
Cash ISAs can be transferred into a stocks and shares ISA, even in different tax years. This means that you can invest into a cash ISA and then transfer this valuable wrapper at a later date if you are running out of time.
You can save into both a cash ISA and stocks and shares ISA within the same year although you cannot exceed the annual allowance when doing so. It is also possible to withdraw funds from an ISA and reinvest them within the same tax year just as long as the overall annual allowance is not exceeded.
From December 2014, it has also become possible to inherit your spouse’s ISA ‘wrapper’, therefore, your ISAs no longer die with you. This is yet another appealing quality of the ISA.
The tax year runs from 6th April – 5th April and your ISA allowance does not roll over into the next so we would encourage savers to make sure they utilise it well before the 5th April cut-off – or you will lose it!
All of our clients receive ISA advice at their annual review point and so we shall be covering the new £20,000 allowance with our clients in reviews from April onwards. We believe that it is a vital allowance not to be missed.
If you are at all unsure about your ISA position for this remaining tax year, we have been monitoring your position so please feel free to contact us.
As always, we are here if you need anything at all