Allowances for Individual Savings Accounts (ISAs) have continued to rise for the current tax year, providing a welcome additional incentive for UK savers. At present during the 2014/15 tax year, investors can save up to £15,000 in an ISA. From 1 July 2014, and following reforms to the ISA system that were announced in the March 2014 Budget, the ISA allowance was raised to £15,000, and you will be allowed to save your entire “New ISA” (NISA) allowance in cash or stocks and shares, or any combination of the two. What’s more, you will be able to transfer your NISA between providers as many times as you like. Research undertaken by the Investment Management Association (IMA) previously suggested people would save more money in ISAs if the allowance were increased
According to the IMA, net ISA inflows in the 12 months to April 2014 reached £2.3bn – over £1bn more than the previous tax year. Meanwhile, according to HM Revenue & Customs, around 14.6 million individuals subscribed to ISAs in the 2012/13 tax year, somewhat higher than the previous year, but still below the number of subscribers in the tax year 2010/11.
ISAs are tax-efficient vehicles that allow individuals to save and invest without having to pay income tax or capital gains tax. ISAs can be a good way for people to start saving, or to add to their existing savings and investments. If you cannot afford to take advantage of the full annual allowance, it is still worth putting away what you can via a regular savings plan, which can start from £50 a month.
Above all, do not forget one of the golden rules of ISA investing – if you do not use it, you will lose it. It is worth trying to make the very most of your allowance each year, if you can. Please note that levels and bases of, and reliefs from, taxation are subject to change.
The contents of this article should not be construed as advice and do not necessarily reflect our views. Financial Advice should always be attained in order to assess your own individual circumstances.