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Important alert: ISAs are changing!

By: Lovewell Blake Financial Planning Date: 16 February 2017
Category: Lovewell Blake Financial Planning

The deadline for you to contribute towards your ISA allowance for the 2016/17 tax year is fast approaching, you have until 5 April 2017 to use this year’s allowance, or it will be lost.

ISAs are a great way of sheltering your hard earned cash from the tax man as you can currently invest up to £15,240 and this could all be in cash, investment (Stocks and Shares) or a mixture of both.

The great news is that from 6 April 2017 your annual allowance will increase to £20,000.

So, are you making the most of this opportunity?

This could mean that a couple who still haven’t used this year’s allowance could potentially invest a total of £70,480 in the coming months and still benefit from the special tax treatment which ISAs enjoy.

What is an ISA?
An ISA (Individual Savings Account) is a tax-free wrapper into which you can invest your cash.

You can invest your whole annual allowance each tax year in Stocks and Shares (or investment funds), or you can have a mixture of both.

Any interest or returns you make will be free from income tax and capital gains tax, so you don’t have to pay anything to the taxman or even declare it on a tax return. This makes an ISA an extremely attractive option to those wishing to save.

What types of ISA are there?
Cash ISAs work in the same way as standard savings accounts except that returns are tax-free. You can generally choose between a variable or fixed rate of interest and these types of ISAs will normally be available through a bank or building society.

Alternatively, if you are willing to take a bit more risk for a better return, you might want to think about putting your money into a Stocks and Shares ISA. Bear in mind though that stocks fall in value as well as grow, so you could end up getting back less than you put in.

Historically, however, Stocks and Shares ISAs do outperform cash accounts over the medium to longer term. There are many different investment funds to choose from, so if you aren’t certain which funds to pick, you should speak to your financial advisor who will be able to make some suitable recommendations depending on your individual circumstances.

To invest in an ISA you must be resident in the UK for tax purposes. Crown employees working overseas such as diplomats and the armed forces, and their spouses who are non-UK resident, may still contribute to an ISA.

You must be aged 18 or over to invest in a Stocks and Shares ISA. You can invest in a Cash ISA from age 16.

You can only pay into one Cash ISA and one Investment ISA during a particular tax year.

It is also possible for UK resident minors to take out a Junior ISA – please speak to a financial adviser if you need more details.

We're here to help

At Lovewell Blake Financial Planning we are here to help you make the right decision to meet your needs – we have access to a wide range of sophisticated tools and providers, offering attractive ISA investments, along with lots of other options, should an ISA not be the right thing for you.

To find out more and speak to one of our expert financial advisers please contact us using the details below.

Call us on: 01603 619620
Email us at: mail@lovewell-blake-fp.co.uk
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