Individual Savings Accounts (ISAs) – 8 things you need to know

  1. They compound up completely tax free – so you get higher returns. (Comment – great)
  2. You don’t get income tax relief on annual ISA contributions. (Comment – not so good)
  3. The ISA allowance for 2015/16 is £15,240. (Comment – not so bad)
  4. You can cash them in any time free of tax and without limit. (Comment – great)
  5. You can invest in one Stocks and Shares ISA and one cash ISA each tax year and split the £15,240 allowance as desired between the two, as long as they stay within the overall limit. (Comment – good)
  6. You can change the investments within your ISA at any time and you can transfer your Cash ISAs to Stocks and Shares ISAs (and vice versa) without incurring a tax charge. (Comment – good)
  7. The new Help to Buy ISA is a new form of Cash ISA where, from 1st December 2015, Her Majesty’s Government will add £50 for any £200 saved in a Cash ISA towards a deposit for a first property. (The maximum Government help is £3,000 and only applies to properties costing less than £250,000 or £450,000 in London). The accounts are limited to one person, so those buying a property together can both receive the bonus. (Comment – political gimmickery)
  8. ISA benefits can now be passed onto spouses. For deaths on or after 3rd December 2014, surviving spouses will have an additional ISA allowance equal to the amount the deceased spouse had in their ISA. For example, Arthur dies on 5th May 2015 having ISAs worth £150,000. Arthur’s widow, Rosie, already has ISAs of her own of £100,000. Rosie’s ISA allowance for 2015/16 will increase by £150,000 from £15,240 to £165,240. Spouses are entitled to this additional allowance even if the ISA assets are left to someone else in the will. (Rosie has 3 years from the date of death to use this extended allowance). (Comment – brilliant)