NISAs now replace ISAs and are very tax efficient

Paying tax on your savings and investments is a simple fact of life.

However, if you hold money in cash accounts you will be receiving very low interest in return which can be frustrating because it is not tax efficient at all.

Therefore if you want to save more tax efficiently then don’t forget your NISA.

On 6th April 2015 you will get a fresh NISA (New Individual Savings Account) allowance if you are a UK citizen. This lets you save or invest up to £15,240 tax efficiently in 2015/16.

Make sure you use this year’s NISA allowance (£15,000) by 5th April.

It’s vital you claim your NISA allowance before this deadline because if you don’t take up your current year’s allowance, you will lose it at midnight. There is no carry back option when it comes to investing or saving into a NISA.

The NISA replaces the ISA and was announced by Chancellor George Osborne in the 2014 Budget, and making use of your NISA allowance lets you invest or save more money with better flexibility.

You can shield more of your savings and investments from paying tax on interest, income or gains made, than ever before.

There are no restrictions as to how much of your NISA allowance may be saved in cash or Stocks and Shares. (Unlike the previous ISAs).

The NISA lets you hold all of your allowance in cash, or all of it in investments, or a combination of the two up to the overall annual allowance.

You can only open one Cash and one Stocks and Shares NISA per tax-year; however you can switch your money between the two types of accounts.

With ISAs previously, you could only transfer from a Cash ISA to a Stocks and Shares ISA, and not the other way. This means a NISA a far more flexible way of saving or investing than the old ISA scheme.

Surviving Spouses Benefit from your NISA too…

Come APRIL 6th 2015 your NISA can now be inherited tax-free by a surviving spouse or civil partner, with the survivor being allowed to retain the inherited ISA in its tax efficient form without it affecting their own allowance for that year.

This effectively allows the survivor to have an increased ISA allowance in that tax year – their own full allowance plus an amount equivalent to the value of the deceased’s ISA at the date of their death.

Rules on how this will work are still being defined by HMRC, but it is good news for savers with spouses.

What about my old ISAs?

If you are worried about the interest rate or investment performance of your old ISAs, you can transfer them into different NISA accounts without losing their tax efficient wrapper.
This will not affect or use your current NISA allowance. Remember, this only works if you are transferring ISAs – don’t withdraw the money with the intention of setting up a new ISA as this will eat into the current year’s allowance!

Are Junior ISAs (JISAs) Affected?

Like the NISA, the JISA is also getting an increased allowance – with the current £4,000 (2014/15) annual allowance rising to £4,080 for the 2015/16 tax year.

This can be used to save or invest for the under 18’s, in either Cash or Stocks and Shares, and like the NISA, this can be in whatever proportions you choose.

The main difference between the two being that the money cannot be withdrawn from a JISA until the age of 18, providing a tax efficient way to save for a child or grandchild’s future.
Is now a good time to review my savings and investments?

Yes, especially if you have held your savings and investment accounts for some time or if your circumstances are changing.

It may be that you have money which is being saved for long-term plans, such as retirement, and would be better off invested rather than being held in cash or it may be that investments you arranged some years ago are not performing as you hoped, or are taking more risk than suits your current circumstances.

It is always a good idea to take stock of the situation and review potential risks with your capital and investments; a financial adviser can help with this.

To find out more about NISAs and how they can help you, please do not hesitate to get in touch.

Call me FREE from a landline: 0800 321 3508
Or direct to my mobile: 07803 508187

(Click to call either number above from a mobile).

Alternatively contact me below…