It has been come time since I last posted to shrewdcookie. I am working on new articles and they will be going live shortly.
Standby!
We are now well into the 2015/16 tax year and there are a few changes to ISAs which you need to be made aware of….
The ISA allowance has increased to £15,240 per investor and this applies to both Cash ISAs (over 16s) and Stocks and Shares ISAs (over 18s). You can invest in one Cash ISA and one Stocks and Shares ISA per tax tear and the total allowance of £15,240 can be split between the two types of ISA as you choose.
Previously you were able to transfer between ISA providers and Cash ISAs could be transferred into Stocks and Shares ISAs. Now, you can also transfer the other way – FROM Stocks and Shares ISAs TO Cash ISAs.
And finally, under new rules, your ISA allowance, if your married, does not die with you as was the previous case. Now, on death, your spouse or civil partner can inherit your ISA allowance.
The current tax year ends on 5th April 2014 and until midnight you can invest up to £11,520 into a Stocks and Shares ISA. This can either be direct with a fund management house or via an investment platform, fund supermarket or wrap provider.
For those who are keen to manage their own portfolios there are a huge range of funds, shares and other investment classes to choose from to benefit from a more favourable tax treatment of income and capital gains tax, in the investors hands.
Alternatively, if you’re not so investment-savvy and wish to receive advice and guidance, please consult an Independent Financial Adviser.
If Stocks and Shares ISAs are not for you, due to the investment risks involved, you can still invest up to £5,760 into a Cash ISA. These are available from many banks, building societies and other institutions. They are quite simply bank account which pay your interest without any tax deducted.
Hope this helps!
A short post for this cold and wet Saturday afternoon.
To achieve financial independence you need to amass sufficient money/investment/assets to provide “unearned income” to replace your “earned income”.
Most will fail to achieve this in their lifetime simply because they spend first and then investment what is left (typically nothing!).
Those who build wealth know that you need to save first then spend what is less.
By effectively giving yourself a pay cut, say 10% of net income, you set this aside as your money for tomorrow. Only then do you spend what is left.
Whatever you decide to invest this money in, make sure it is taken from your bank account by Direct Debit immediately after payday, thus avoiding the temptation to spend it!!
Good luck 🙂
Just a quick post as I am off for the long Bank Holiday Weekend, but I have been reading an interesting post by Lee over at FivePencePiece on the need for Compulsory Financial Education in our schools.
I wholeheartedly agree with Lee – we received not a single piece of guidance on personal finance whilst I was at school. it is quite obvious that the general level of financial education in the UK is low. Please read Lee’s article and support his efforts.
Simon
The end of another tax year is now upon us and you have until 23;59 hours tonight (5th April 2012) to use your ISA allowance.
Here is my ISA article – also check out Lee’s over at FivePencePiece
Just a quick heads-up people – the deadline for submitting your electronic deadline is fast approaching – 23.59 hours on Tuesday 31st January 2012.
This is the deadline for submitting your electronic return (paper returns were due in by 31st october 2011) for the 2010/11 tax year.
It’s also the deadline for payments due in January.
More info available on the HMRC site.
Here’s a brief overview of ISAs (Individual Savings Accounts) – what you can and cannot do with them in the current 2011/12 tax year which ends on 5th April 2012.
What is an ISA?
An ISA (Individual Savings Account) is a tax-efficient form of saving or investment. It is tax-efficient in terms of income and capital gains tax. The actual rules are beyond the scope of this quick article but check the HMRC website for more info if needed. Basically, the are tax free in terms of income and capital gains taxes in your hands.
An ISA will be included in calculating your Estate value for probate and inheritance tax purposes.
What different types of ISA are there?
There are two types of ISA:
1. Cash ISA – a savings or deposit account on which interest is paid tax-free.
2. Stocks and Shares ISA – this is a an ISA which invests (normally through the investors own choice) in mutual funds (collection of shares managed by a fund manager) or directly into individual company shares.
Self-select ISAs allow you to choose your own funds and/or shares. Seek advice from an Independent Financial Adviser (IFA) if you’re not sure where to invest.
Investment Limits
Basically…..
1. Up to £10,680 in a Stocks and Shares ISA.
OR
2. Up to £5,340 can be invested in a Cash ISA with any unused allowance being available for a Stocks and Shares ISA. E.g. if you put £2,000 into a Cash ISA you can still put £8,680 into a Stocks and Shares ISA.
Can I Transfer from one ISA provider to another?
Yes – approach the company to whom you wish to transfer to arrange this. Under no circumstances surrender the ISA in order to reinvest it. To retain its tax-efficient status, the transfer must be conducted by the plan managers – you will lose the tax-efficient benefits if you surrender an existing ISA 🙁
If I transfer an “old” ISA does this use my current years’ ISA allowance?
No – each individual has a new personal ISA allowance on 6th April each tax year, regardless of any previous ISA investment they may have made.
Can a husband and wife have their own ISA’s?
Yes, everyone aged over 18 has there own personal ISA allowance. It is currently £10,680 for the 2011/12 tax year. Joint ISAs are not allowed.
If I take out a Cash ISA and a Stocks and Shares ISA do they have to be with the same provider?
No. You can have a Cash ISA with your bank or building society AND a Stocks and Shares ISA with a separate investment house.
Is there any risk involved?
Cash ISA – generally no – if the bank or building society were to “default” then you should be covered by the Financial Services Compensation Scheme (FSCS). In terms of returns, there is no volatility involved as this is purely a deposit/bank account.
Stocks and Shares ISA – these do carry risk – the level of risk will depend on the fund(s) you invest in – some funds are risker than others and many investors like to have a spread of funds from different fund management companies and in different geographical sectors (e.g. UK. Europe, Far East etc…) or asset classes (technology, gold, oil etc…)
More information on the compensation schemes can be found at FSCS – please note you cannot claim on the FSCS if your plan simply falls in value due to poor fund choice or investment market conditions!!!
If you have any comments or questions please let me know in the comments section below.
Remember though – we don’t give financial advice on this site!
At midnight tonight the new 2011/12 tax year starts!
ISA allowances are increasing from £10,200 to £10,680.
Of this £10,680, up to £5,340 can be invested in a Cash ISA, and any unused allowance between the amount you put into a Cash ISA and the overall allowance of £10,680 can be invested in a Stocks and Shares ISA.
For example, invest £2,000 in a Cash ISA from midnight tonight and you can still invest up to £8,680 into a Stocks and Shares ISA.
If you can afford to invest on a monthly basis, to benefit from pound cost averaging, the maximum each month (assuming 12 payments) is £890.
Any questions, add them below and I’ll answer them for you.
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It’s that time of year again – as the end of another tax year approaches on 5th April we are now well and truly into “ISA Season”!
Here’s a brief overview of ISAs for those new to this form of savings/investment, as well as for those who may have a few queries they need answers to.
What is an ISA?
An ISA (Individual Savings Account) is a tax-efficient form of saving or investment. It is tax-efficient in terms of income and capital gains tax. The actual rules are beyond the scope of this quick article but check the HMRC website for more info if needed.
An ISA will be included in calculating your Estate value for probate and inheritance tax purposes.
What different types of ISA are there?
There are two types of ISA:
1. Cash ISA – a savings or deposit account on which interest is paid tax-free.
2. Stocks and Shares ISA – this is a an ISA which invests (normally through the investors own choice) in mutual funds (collection of shares managed by a fund manager) or directly into individual company shares.
Self-select ISA’s allow you to choose your own funds and/or shares. If you don’t feel confident enough to make your own fund choice then consult an Independent Financial Adviser.
Investment Limits
Basically…..
1. Up to £10,200 in a Stocks and Shares ISA.
OR
2. Up to £5,100 can be invested in a Cash ISA with any unused allowance being available for a Stocks and Shares ISA. E.g. if you put £3,000 into a Cash ISA you can still put £7,200 into a Stocks and Shares ISA.
Can I Transfer from one ISA provider to another?
Yes – approach the company to whom you wish to transfer to arrange this. Under no circumstances surrender the ISA in order to reinvest it – the transfer must be conducted by the plan managers – you will lose the tax-efficient benefits if you surrender an existing ISA!!!
If I transfer an “old” ISA does this use my current years ISA allowance?
No
Can a husband and wife have their own ISA’s?
Yes, everyone aged over 18 has there own personal ISA allowance. It is currently £10,200 and this is increasing to £10,680 next year from 6th April.
If I take out a Cash ISA and a Stocks and Shares ISA do they have to be with the same provider?
No. You can have a Cash ISA with your bank or building society AND a Stocks and Shares ISA with a separate investment house.
Is there any risk involved?
Cash ISA – generally no – if the bank or building society were to “default” then you should be covered by the Financial Services Compensation Scheme (FSCS). In terms of returns, there is no volatility involved as this is purely a deposit/bank account.
Stocks and Shares ISA – these do carry risk – the level of risk will depend on the fund(s) you invest in – some funds are risker than others and many investors like to have a spread of funds from different fund management companies and in different geographical sectors (e.g. UK. Europe, Far East etc…) or asset classes (technology, gold, oil etc…)
More information on the compensation schemes can be found at FSCS – please note you cannot claim on the FSCS if your plan simply falls in value due to poor fund choice or investment market conditions!!!
If you have any comments or questions please let me know in the comments section below.
Remember though – we don’t give financial advice on this site!