Coming soon following a radical overhaul is the new Isa (‘Nisa’), which will offer a number of ways for savers to maximise returns on investments while paying little or no tax.
From July 1st, the amount you can put into an Isa each year is being boosted from £11,880 to £15,000, and with this rise comes new freedoms.
These include the ability to move savings freely between shares, cash and other investments.
This makes Nisas valuable to all generations of savers, as explained below:
Early working life – Using your Isa for short-term goals
Being able to save more money is a huge benefit, but the Nisas go one step further and allow for the full amount saved to be used however it best suits the saver (shares, cash etc.). This means young working savers with short-term objectives (i.e. the deposit for a home) will be able to quickly move investments into cash when they need it.
Later working life – Boosting your Isa before retirement
For people who are nearing retirement, it is often a priority to protect investments from fluctuations in the market. Having a range of assets is crucial, and for workers moving into the second half of their working life, their Isa savings can come in handy for branching out into a variety of investments. The old Isa rules restricted this, but the Nisas allow for complete freedom to move between shares, cash and bonds.
Early retirement – making Isa money go the distance
Some people retiring early may choose to live off the income from their Isas, and due to the new rules they will not have to pay income tax on their tax return. It is important however for these types of savers to ensure their Isa money produces an income that does not fluctuate too much in response to market movements, but still has the chance to grow. Again multi-asset funds can be convenient.
Late retirement – Planning your Isa for inheritance tax
When the new Isa rules are introduced, it will be far easier for savers to amass large sums of valuable ‘tax wrapper’. Even if someone is retired and no longer earning an income, they may still have money flowing in from other sources (i.e. downsizing their house, inheriting assets from a relative etc.). Each tax year means £15,000 more of this money will be able to go into a tax-free Isa.