8 August
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ISAs: time to save

The government again raised the Individual Savings Account threshold in its April 2017 budget.

Whilst we are certainly used to this yearly increase, the 2017/18 tax year augmentation sees the threshold raised to £20,000. This means that you can invest up to £20,000 in one tax year without the need to pay tax on the interest you receive, or the income you receive from investments.

There are four types of ISAs: Cash ISAs, Stock and Shares ISAs, Innovative ISAs and Lifetime ISAs.

The first is a simple bank account in which your balance attracts interest. Given the historically low interest rate in the UK, this type of ISA is proving less popular than others.

In a Stock and Shares ISA, your funds are reinvested in the stock market in order to increase their value. However, what with the volatile nature of the stock market, they are liable to losing value if conditions are not favourable.

Innovative ISAs, set up in 2016, allow savers using P2P (peer-to-peer) lending platforms to receive tax-free interest.

Finally, lifetime ISAs. Available for 18 to 40 year-olds, these are designed to help savers prepare for the purchase of their first home, or for later life.

The government’s raising of the ISA threshold continues its tradition of lifting restrictions on ISAs. It’s now possible to transfer amounts between the different ISAs without affected the £20,000 threshold.

If you’d like to know more about the tax-efficient savings of ISAs, get in touch with your local AIMS accountant.


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