2. Paying tax on your savings and investments is always irritating, even
more so for those who hold money in cash accounts and are receiving
little in interest paid.
But things are about to get a whole lot ‘NISA’ for investors and savers
from the 1st July…
3. In his 2014 Budget, Chancellor George Osborne announced the arrival
of the NISA (New Individual Savings Account) which replaces the ISA,
and allows you to save or invest up to £15,000 in cash, shares or a
combination of the two. With an increase on the £11,880 allowed per
year, the current allowance for an ISA (2014/15), the NISA allows you to
protect more of your savings and investments from tax on interest,
income or gains (with the exception of dividends which will continue to
be paid after a deduction of 10% tax).
The NISA is more flexible too. Gone will be the restrictions on how much
you can save into either cash or stocks and shares that governed the
ISA. With the NISA you can hold all of your allowance in cash, or all of it
in investments, or any combination of the two.
4. How will NISAs work?
From 1 July, you can choose to pay in a combination of amounts
between a cash and a stocks & shares NISA, up to the overall annual
limit of £15,000. You can only open one cash NISA and one stocks and
shares NISA to put new money into each tax-year. You can however,
open other NISAs to transfer old ISAs into. This is the same rule as for
current ISAs.
What about ISAs opened between 6 April and July?
Any ISAs opened between 6 April and 30 June will automatically become
a NISA. From 1 July, you'll be able to add further money up to the new
£15,000 limit.
5. Will I be able to transfer between cash and investments?
You can already transfer existing cash ISAs into stock and shares ISAs,
but not the other way round. From 1 July, you'll be able to move money
both ways. You'll largely be free to move as much as you want between
the types of account, depending upon the provider. There's one
exception if you're moving from investments to cash, as anything
deposited between 6 April and 30 June 2014 must be transferred as a
whole.
Are NISAs any good?
Any monies which are held in cash savings or taxable investments are
likely to be better off in a NISA if you are a tax-payer. ISAs and NISAs
are tax efficient accounts and many people use their allowance each
year and in time are able to shield a large proportion of their wealth from
unnecessary tax.
6. Is now a good time to review my savings and investments?
Yes, especially if you have held your savings and investment accounts
for some time. It may be that you have money which is being saved for
the long term projects, such as retirement, and would be better off
invested rather than being held in cash. It is always a good idea to take
stock of the situation and review why it is that you are taking risk with
your capital. What it the purpose of your investment? It could be that
you have just held a number of different equity ISAs and need to check
they are still producing good returns and meet your attitude to risk.
Reviewing your savings and investments whilst taking a look at the NISA
provides the ideal opportunity to re-connect with your money.
7. If you would like to find out more about the new ISA,
please email letstalk@sanlam.co.uk and one of our
Wealth Planners will be in touch.
The article is for information purposes and should not be treated as advice. Individual
circumstances should always be considered prior to purchasing any financial products. For further
information contact Sanlam Private Wealth by e-mailing letstalk@sanlam.co.uk. Sanlam Private
Wealth is a trading name of Sanlam Private Wealth UK Limited. Authorised and regulated by the
Financial Conduct Authority.
