Nicholls Stevens Financial Services

USING YOUR ISA ALLOWANCE

Use it or lose it! Each tax year The Chancellor allows each of us £7,200 to invest in an ISA scheme 

What are these advantages?

                *             Interest paid is tax free or put another way you enjoy gross interest

                *             Any gains are free from capital gains tax

Hints on using the allowance

1                     If you have any money in a Building Society account and pay tax, you should be moving up to £3,600 into a cash ISA every tax year. You need a flexible ISA with instant access. The result of this is that you have a Building Society account on which you are receiving tax free interest

2                     If you are a non-tax payer you can receive tax free interest from all Bank and Building Society accounts, so you only need an ISA if the interest rate is better than you can receive elsewhere

3                     If you are considering a fixed rate ISA bear in mind that interest rates are now low, so do not tie up your money for too long in a fixed rate, because in due course interest rates will rise again

4                     If you have a available capital in excess of the £3,600 cash ISA limit and can tie this up for say five years now may be the time to invest in a stocks and shares ISA (we can make a recommendation). The reason is that you will be buying units cheaply because the markets are low but you may have to wait a while for the return

5                     If you are concerned about the low level of interest rates, you could consider a stocks and shares ISA using a corporate bond fund. There is a risk to capital but the interest will almost certainly be higher (we can make a recommendation)