With spring feeling like it has sprung and the new tax year upon us, our minds flit to ways of legally avoiding the tax man.
Individual Savings Accounts (ISA’s) have become a tax efficient core holding for many people and the recent budget has given us some good news:
From July 1 2014 ISA’s will be reformed into a simpler product, the ‘New ISA’ (NISA) and all existing ISA’s will become NISA.
Also from July 1st the overall annual subscription limit for these accounts will be increased to £15,000 for the 14/15 tax year.
ISA savers will also be able to subscribe this full amount to a cash account (currently only 50% of the overall ISA limit can be saved in cash). Under the NISA, investors will have new rights to transfer their investments from a stocks and shares to a cash account.
There will be consequential changes to the rules on the investments that can be held in a NISA, so a wider range of securities (including certain retail bonds with less than five years before maturity) can be invested.
In addition, Core Capital Deferred Shares issued by building societies will become eligible to be held in a NISA, Junior ISA or Child Trust Fund (CTF). The amount that can be subscribed to a child’s Junior ISA or CTF in 14/15 will be increased to £4,000.
These measures will increase the choice and flexibility available to savers and open up a generous annual allowance each year for households.
Remember stocks and shares ISA’s will go up and down in value, they should be approached sensibly. A full and proper ‘attitude to risk’ assessment should be undertaken.
With a myriad of funds available, it is vital that, whilst being tax efficient, the investment should also not give you any nasty surprises along the way.