How to make the most of your ISA in the 2014/2015 tax year - Contractor Financials guest blog

Tuesday 22nd April, 2014
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Whether you are new to the world of ISA's or you have a portfolio of investments built up, the 2014/2015 tax year is set to open up more scope for ISA investment. As of July 1st the ISA limit is increasing from £11,880 to £15,000 and will be renamed as a New ISA (NISA). The reason for the name change is the Government's wish to reflect the significant limits and flexibility for investors.

The NISA will be more flexible in that with the new £15,000 allowance this can be either as cash, stocks and shares or any combination of the two. Under the NISA rules you will be able to transfer previous years ISA savings freely between stocks and shares and cash if you wish. From 1st July 2014, you will also be able to transfer amounts you hold in a Stocks and Shares NISA to a Cash NISA. This applies to amounts that you have paid in during previous tax years.

To help Contractors take advantage of an ISA for the new tax year, Contractor Financials have compiled some tips and advice on how to maximise your ISA.

Key points for Contractors to consider when making a NISA investment in 2014/2015:

Asset allocation:

  • There are two types of NISA:
    Cash NISA's are simple savings accounts and no tax paid on any interest you make.
    Stock and Shares NISA's are investment based savings. You can hold shares of companies, funds or investments trusts.
  • You have a choice to split your allowance in to a mix of cash NISA and the rest as a stocks and shares NISA
  • Savers will be restricted to two NISA’s per year, one cash and one stocks and shares

Changes to allowances:

  • The total amount that savers can shield from tax in the current tax year is £11,880
  • But as of July 1st the new tax free allowance is £15,000
  • Higher rate tax payers must pay 10% tax on any dividends accrued from investments with a NISA, comparatively a non-ISA investment would incur 32.3% tax

Tax on your NISA:

  • Basic rate taxpayers do not need to pay any additional taxes on NISA investments.
  • If you put too much money in to your NISA or open more than one account in a tax year. The excess payments will be invalid and HMRC will contact you.
  • Your NISA will cease on the date of your death. No tax income or capital gains will be paid up to this date, however if your Estate accrues any such gains after this time there will be tax implications.

If you would like to speak to someone on the improved flexibility surrounding ISA's, please contact one of the Adviser's at ContractorFinancials, the Independent Financial Advisers for Contractors on 0208 090 0702 or email paystream@contractorfinancials.com. They are specialists in pension and investments advice tailored to your unique working status and can help you to make the most of the new opportunities surrounding pension investment, especially after the announcements made in the Spring Budget 2014.



As of July 1st the new tax free allowance is £15,000.