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Save tax-efficiently with ISAs

By Wesleyan

Whether saving towards a specific goal, or simply putting cash aside for a rainy day, there has never been a better time for professionals to take advantage of individual savings accounts (ISAs).

Although a range of different investment options are available, ISA products offer tax advantages to savers, while giving them the chance to invest up to £15,240 a year.

ISAs are not difficult to set up or get to grips with, yet they could provide a number of benefits to savers…

ISAs: The key benefits

By opening an ISA, the likes of doctors, lawyers and teachers can:

  • Save tax-efficiently. ISA holders do not have to pay tax on the interest or capital gains which their money earns
  • Invest in stocks and shares. Stocks & shares ISAs, such as the With Profits ISA from Wesleyan, enable people to actively invest their money in things like investment trusts, bonds and unit trusts. By increasing their level of risk, they have the opportunity to potentially secure higher returns on their cash
  • Gain interest on cash savings. As an alternative to stocks & shares accounts, cash ISAs give people the chance to build up interest on their savings, while avoiding exposure to the investment markets

How cash ISAs work

Following recent changes in the law, Britons can now save their full £15,240 annual allowance in a stocks & shares ISA, a cash ISA, or a mix of the two.

Cash ISAs are very similar to normal savings accounts, in the sense that people earn interest on the money they deposit in them.

Although they must stay within their annual allowance, those using these products do not have to pay tax on the interest they earn over the financial year.

How stocks & shares ISAs work

Cash ISAs can provide certainty to savers, with the interest rates on their accounts dictating the returns they can potentially earn.

In comparison, stocks & shares ISAs allow people to take on a degree of risk, but offer them potentially higher returns in exchange.

These accounts enable Britons to place their money in different investments, including equities and bonds.

By taking advantage of stocks & shares ISAs, individuals have the opportunity to grow their savings by making capital gains on their investments. And they do not have to pay tax on the capital gains or income they achieve.

But those considering stocks & shares ISAs must be aware that they are not automatically guaranteed success, and their investments could go down as well as up.

What can ISAs be used for?

Everyone has different aspirations and dreams, whether it's raising a family or securing a home of their own.

ISAs can play a range of useful roles, helping people to:
  • Save towards a deposit on a new home, or pay for a property extension
  • Build up the funds for a new car, or another big-ticket purchase
  • Meet the costs of a child's education, and their future university career
  • Save towards a dream wedding, or an engagement ring
  • Top up their pension savings, to ensure a comfortable retirement

Introducing the With Profits ISA

The With Profits ISA offered by Wesleyan provides the tax advantages of a stocks & shares account, while giving savers the chance to invest in the group's With Profits Fund.

Here's how it works:
  • The With Profits ISA seeks to provide savers with capital growth over the medium to long term, as it is invested in Wesleyan's With Profits Fund
  • This fund invests in UK and international shares, along with things like fixed-interest stocks, property, cash, and other related investments
  • The fund is designed to avoid sharp increases and decreases in people's investments, by instead seeking to smooth out their returns
  • Those signing up for the With Profits ISA are encouraged to stay invested for five years or longer
  • Investors will not be required to pay tax on the income or capital gains which they secure through the With Profits Fund

Copyright Press Association 2015

'WESLEYAN’ is a trading name of the Wesleyan Group of companies.

Wesleyan Assurance Society and Wesleyan Bank Ltd are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Wesleyan Financial Services Ltd, Wesleyan Unit Trust Managers Ltd, Syscap Ltd, Practice Plan Ltd and DPAS Ltd are authorised and regulated by the Financial Conduct Authority.  Advice about investments, insurance and mortgages is provided by Wesleyan Financial Services Ltd.

Click for more information about the Wesleyan group of companies.

© 2016 Wesleyan Assurance Society