ISAs

Most clients should be purchasing an ISA every tax year. If you are a cautious investor or have only a small amount of money to invest you should select a cash ISA with immediate access. This is more tax efficient than keeping your money in a current account. If you are as non tasxpayer there is no point in investing in a csh ISA unless the rate is better than the gross rate you can obtain from any other account.

At Nicholls Stevens we believe it is important for everyone to take advantage of the allowance each year. Clients can, over a number of years build up large funds which are free from CGT and if invested in, say fixed interest securities, also provides a tax free income.

We see many existing ISA holdings re clients have purchased the “flavour of the year” ISA and hung on to it. In many instances these individual holdings do not match the client’s attitude to risk. Nicholls Stevens can review these funds, recommend re-registering on to a Wrap or Platform and then carry out a re-organisation based on an asset allocation which suits your temperament. We can then keep the performance of these funds under review

Under current legislation there are two types of ISA;

cash ISA

 stocks and shares ISA.

Your questions answered:

Who can buy an ISA ?

An individual aged 18 or more and is resident or ordinarily resident in the uk

a 16 or 17 year old can take out the cash only component

Can I achieve an income?

Yes, if you purchase a cash ISA or a stocks and shares ISA which pays a dividend such as an equity income fund, or a fixed interest or corporate bond fund

Can I have access to my investment?

Yes, at any time unless you have chosen a fixed term cash ISA

What are the tax implications?

Any interest is paid free of tax, any growth is free of capital gains tax. However, the 10% tax withheld on dividends cannot be reclaimed

What about charges and risk?

You need to carefully read the details of the fund you select

How much can I invest

Up to £5,100 in the cash component

Up to £10,200 in Stocks and Shares, if you have already invested in a cash ISA for that year you must deduct this from the total

Will the limit  ever increase?
It is the Government’s intention to increase the allowance each April in line with rpi based on the increase in the rpi the previous September

Can I switch my cash or stocks and shares ISA if I can find a more favourable interest rate or fund?
Yes, you can transfer at any time. This does not have any affect on the ISA allowance for new money in the year you make the transfer. It is also possible to transfer from cash ISA to Stocks asnd Shares ISA but not the other way