From the Bellpenny Nest
Getting your finances in check at the start of the year can be a great way to set yourself up for the months ahead. With changes to ISA allowances due in April 2017, were you aware that there are a number of tax benefits to ISA investing?
Transferring your money across ISAs and utilising your allowances can be made simple through the help of your Bellpenny Financial Planner.
Our specialist tax planning service can help you identify how to become more tax efficient, saving you money over the long term, whilst taking into consideration any impending changes set to take place in the new tax year. Placing your investments in an ISA allows you to save tax-free. Some individuals aren’t aware but an ISA is not an investment in its own right, it’s actually a tax-wrapper which in effect shields itself from some or all of the tax that is normally due.
In fact did you know that within an ISA;
Depending on your circumstances there are a number of ISA options for you to choose from, which are designed to suit both short and long term investors.
A Cash ISA, for example, could be used as short-term solution, and has the option to repay any funds withdrawn in the same year without affecting your allowance – which is another recent development available through a ‘flexible’ ISA.
However if you’re looking to save long-term and are willing to take a greater risk, then perhaps an Equity ISA could bring you more capital growth. If you haven't already read our article Risk Versus Reward; an Equity ISA, we cover this in more detail in our October - December 2016 newsletter. Contact your Planner if you'd like another copy.
There is a generous annual contribution available which is currently £15,240, but this is set to increase to £20,000 per adult in 2017/2018.
ISAs and pensions
In the vast majority of cases a Pension (another type of ‘wrapper’) still represents the most tax efficient way to save for your retirement, mainly because of the tax relief offered while you are here and after your death.
However pension contributions also have an annual and lifetime limit; any contributions in excess of this is usually not an attractive option. In this situation, perhaps you could consider a supplementary pension pot, which is built through ISA contributions and then flexibly withdraw your funds during retirement as required with no further tax liability.
Your Bellpenny Financial Planner can review your needs to ensure your money is invested in the right place. A holistic financial plan will help to assign your funds to the correct wrapper to utilise your allowances to their maximum benefits.