Wealth Management


New ISAs, or NISAs, are a tax-favoured saving and/or investment plan popular with individuals since their introduction as Personal Equity Plans in the 1986 Budget. They’ve changed over the years, and you can now choose how to split your individual allowance between stocks, shares and cash ISAs.

There’s no limit on your total NISA holding, so you can top-up to an existing Cash ISAs, a Stocks & Shares ISAs, or both. You can split your investment in any ratio you choose, as long as your 2018-19 investments don’t exceed £20,000 per person.

Your annual allowance is available only until the end of the tax year and doesn’t roll over. So, to take maximum advantage of your allowance, you need to invest early in the tax year. But, if you don’t want to invest your full allowance at the start of the year, you can always make further investments within your allowance at any time before the tax year ends.

Cash NISAs are savings accounts with tax-free interest. There are several options, such as instant access, regular savings and fixed rate. It’s your decision: for example, will you need quick access to your money or can you tie up at least some of your annual allowance for a fixed period and benefit from a slightly higher interest rate.

In exactly the same way as other pooled investments, Stocks & Shares NISAs are a way of investing your money in funds, bonds or shares and are usually managed by a Fund Manager. The difference lies in the three main tax favours. Firstly, you don’t pay capital gains tax on profits made from share price increases. Secondly, interest earned on corporate bonds is tax-free. Thirdly, tax on income from share investments (paid within the fund and not personally by the investor) is capped at 10%. This last is a significant benefit to a higher rate tax payers. Please remember that investment values may fall as well as rise; and you may not get back as much as you invested.

Married couples have even more choices. Working together, they can make best use of their individual NISA allowances by tactically investing up to £40,000 across a broad range of NISA options.

Not all investments can be held as NISAs, but ISA tax efficiency should usually be a cornerstone of the ‘average’ saver’s approach to saving and investing. Our part is to suggest what’s best for you – and even sometimes suggest alternative non-ISA solutions that better meet your needs.