Features of having an ISA

Features of having an ISA

• Individual Savings Accounts (ISA) are a tax-efficient way to save money - so you don't pay additional income tax on the interest earned on cash or on any capital gains on investments.
  
  So for example, if you had £15,000 in an ISA with 3% interest, you would earn £450 in interest and you would be able to keep all of it.  Outside of an ISA, as a basic tax payer, you would only get to keep £360, and as a higher tax rate payer, it would only be £270.
• By maximising the full ISA allowance every year, you can create a sizeable portfolio with tax advantages, providing you do not make any withdrawals.  You don't lose the tax efficiencies of ISAs from previous years, so you can protect more of your investments.
• Even though the economy is seemingly in recovery, you may feel discouraged from investing.  But if you don't maximise your full ISA allowance, you will also lose the opportunity to benefit when market conditions improve.  
• In the Government's 2014 Autumn Statement, changes to the inheritance of the tax benefits on death were announced.  Spouses and civil partners can now inherit their partner's ISA tax allowance after their death, effective from 6 April 2015 in respect of deaths occurring on or after 3 December 2014.

Here is a summary of what these changes mean:

• On your death, your surviving spouse or civil partner will be given an enhanced ISA subscription limit, for a set period of time, which will be the value of your ISA holdings at the time of your death. This means your spouse's or civil partner's allowance will be increased.
• Your surviving spouse or civil partner will be entitled to the enhanced subscription limit even if the money in the ISA had been left to someone else.
• The enhanced subscriptions must be made to the ISA Manager with whom your ISA was held. Once the subscriptions are made, your spouse is free to transfer to a different ISA Manager.

For example:

John dies on 8 December 2014, with £80,000 in his ISA. John's estate is administered in accordance with the terms of his Will and is split between his children and his wife Helen. From 6 April 2015, Helen has the opportunity to shelter £80,000 of her money within an ISA in addition to her own personal subscription allowance of £15,240. Helen can therefore subscribe £95,240 in total to her ISA.

Apply or top up your With Profits ISA online or contact your Financial Consultant for further information.