Allowances for Individual Savings Accounts (ISAs) have again been increased for the current tax year, providing a welcome additional incentive not only for existing investors, but also for those who might be new to tax-free saving. ISAs are tax-efficient vehicles that allow individuals to save and invest without having to pay income tax or capital gains tax, and they can be a good way for people to start saving or to add to their existing portfolio of savings and investments.
The introduction of the ‘New ISA’ (NISA) from 1 July 2014 saw substantial reforms to the ISA system that provide greater flexibility and more choice for investors. Under the new system, savers can invest their entire £15,240 allowance for the 2015/16 tax year into cash, stocks and shares, or any combination of the two. Moreover, investors can transfer their ISAs between providers as often as they like (subject to their providers’ rules).
Do not forget one of the golden rules of ISA investing – if you do not use it, you lose it – so make the most of each year’s allowance. Please note that levels and bases of, and reliefs from, taxation are subject to change.