Twenty Years of ISAs
The Individual Savings Account (ISA) celebrates its 20th anniversary this year. Launched in March 1999, the ISA was the result of the Government’s plan to encourage more people to save. Here are some reminders of the features and history of the ISA:
Any interest (Cash ISA) or growth on investments (Stocks and Shares ISA) in an ISA is tax-free;
There is now one overall savings limit of £20,000 allowing savers to keep money in cash or shares inside the same ISA;
There are a number of different types of ISA (Lifetime ISA, Help to Buy ISA and Innovative Finance ISA) and savers can have one of each type.
The government launched Junior ISAs in 2011 which allow parents and grandparents to save or invest up to £4260 per annum with the young person gaining access to the account when they reach 16;
In the 2017-18 tax year, approximately £69bn was saved into ISAs by adults and the average amount saved in the year was £6409.
A total of £608bn is held in ISAs, enough to build the HS2 rail line 10 times over;
Although more men hold regular savings accounts than women, the roles are reversed for ISAs;
ISAs can be passed on after you die and retain their benefits. After death, your ISA keeps its tax-free status. If you pass the account to your spouse in your will, it is not subject to inheritance tax and the beneficiary will also be given an additional ISA allowance equivalent to the value of the account(s) so the money can keep its tax-free status without the beneficiary’s own ISA allowance being used up;
Cash ISAs are an important part of any savings portfolio if you want to protect some of your money against stock market fluctuations or you need short-term access to your cash;
The biggest draw for Cash ISAs is that they offer an £85,000 deposit limit protected by the Financial Services Compensation Scheme (FSCS);
With a flexible ISA you can take cash out and replace it within the same tax year without affecting your allowance.
It is possible to transfer the savings in a Cash ISA to a Stocks and Shares ISA later on while keeping the tax-free wrapper in place and leaving that year’s ISA allowance unaffected;
If you are worried about stock market volatility due to Brexit, you can either save money into a Cash ISA or open a Stocks and Shares ISA and keep the money in cash until you are ready to invest.
If you snooze you lose: you cannot carry forward any unused tax allowance to later years.
A Bira Bank ISA is a great way of saving tax-free with highly competitive rates, to find out more click below or call David and Frank on 03330 048 048.
Bira Bank ISAs