Plenty of positive changes arose in 2014 around ISA’s, including, for starters, a name change to NISA (“New” ISA). Further changes arose in the recent 2014 Autumn Statement giving new tax breaks for ISA savers.
Recap on the New Individual Savings Account (NISA)
The 2014 Budget in March increased the threshold for tax free savings to £15,000 and made the T&C’s much more flexible. No longer are there restrictions around how much can be placed in a Cash ISA; the full allowance of £15,000 can be if preferred. Or, if splitting an investment between a Cash ISA and a Stocks and Shares ISA transfers can be made between the two accounts, giving savers much more control over the way in which they save.
Read our simple five-step guide to what’s new with the NISA
Recent ISA changes announced for 2015/2016
ISA’s continue to be the nations’ favourite way to save for retirement. It especially suits those who are not high risk takers and feel comfort knowing they can access their funds if the situation requires.
Increase in ISA allowance for 15/16
The Autumn Statement on 3 December 2014 announced that the ISA allowance would increase to £15,240 from 6 April 2015. A much smaller increase than the previous hike in 2014/2015 yet a rise nonetheless.
Widowers to no longer miss out on ISA tax breaks
More substantial news however, was relating to the tax status of ISA’s upon death.
Up until the recent Autumn Statement, if an ISA saver died, their ISA fund would lose the tax-free status. The spouse or civil partner would then have to pay tax on the savings, even when frequently the savings had been made together.
With immediate effect from 4 December 2015, this rule has been abolished and widows and widowers will now inherit the savings fund with it’s tax-free status intact.
Extra ISA allowance for widows and widowers
In addition, the Chancellor announced that from 6 April 2015 widows and widowers would also receive an additional tax free allowance each year, equal to the balance of their spouse or civil partner’s ISA fund. This is so they can continue to build savings and secure their financial future.
Getting the best rate ISA for 2015/2016
Despite ISA’s still being a popular option for retirement planning, interest rates have not been so favourable, with the average rate for a one-year cash ISA falling 40% in the last three years.
This is simply due to the fact that most high street banks don’t want or need cash investors. Banks are in fact cash rich still riding on the remainder of the money from the £80 billion Funding for Lending Scheme in 2012. Coupled with more investment in ISA’s due to the increased annual allowance, it is easy to see why banks are not encouraging further deposits.
Rates could rise later this year but experts predict it will be marginal.
Calling: Doctors and Dentists with ISA’s
Doctors and dentists find themselves in the position of having excess income and many choose to invest in an ISA.
A bespoke wealth management and retirement plan is always advisable taking into account your income, assets, family situation, age, attitude to risk and overall financial requirements. Dental & Medical Financial Services help doctors and dentists like you every day.