Changes to ISA allowance
Budget 2009 ISA changes
As you may already know, an ISA (Individual Savings Account) is a useful way to protect your cash savings from tax on the interest, or your Stocks & Shares investments from income and capital gains tax.
In the last budget, the Chancellor announced significant changes to the ISA tax rules and these are listed below. The new limits come into effect from 6th October 2009 for those aged 50 and over; and from 6th April 2010 for everybody else.
- If you are over 50, with effect from 6th October 2009 the overall maximum Stocks & Shares ISA allowance has increased to £10,200 for the 2009/10 tax year. You are able to invest up to £7,200 now and then top up with the extra £3,000 after 6th October 2009.
- The maximum allowable Cash portion is currently £3,600; If you are over 50, you will be able to save up to £5,100 from 6th October 2009.
- You can now transfer your Cash ISA into a Stocks & Shares ISA without affecting your annual allowance, giving your money a better chance to grow over the medium to long term. In addition, there will be no tax to pay on the returns you earn from your ISA. However you will not be able to transfer the other way from a Stocks & Shares ISA to a Cash ISA.
- The 'Mini' and 'Maxi' ISA distinction no longer exists. Any Maxi or Mini ISA is now simply called an ISA.
- Any PEPs (Personal Equity Plans) have now automatically become a 'Stocks and Shares ISA'.
The increase in the amount you are able to save gives you the opportunity to ensure that much more of your hard-earned savings are sheltered from the taxman.
Whatever you are saving for, it is worthwhile considering the ISA wrapper as a means of ensuring that your savings get the best return possible.
Don't forget, if the interest rate on your existing Cash ISA has fallen away, you can transfer it to another ISA with a better rate without affecting your ISA allowance for the year. The same goes for Stocks & Shares ISAs.
If you would like to explore your investment opportunities further, please contact Mark Welsh on (01392) 222617.
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