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As clients who manage their own investments you may have made a New Year's resolution to take more time in evaluating your investments and ensuring you're managing your wealth in the most tax efficient way. The new ISA and Junior ISA allowances for 2015/16 are:
|ISA||2015/16 allowance (begins on 6 April 2015)|
|Stocks and Shares ISA||£15,240|
An ISA is an Individual Savings Account which is held in a tax efficient wrapper. You do not pay income tax on the interest you earn and you do not pay capital gains tax on any profit from investments held in an ISA. This is not the case with an ordinary savings account or if you hold investments directly.
When it comes to income tax, if you are a higher or an additional rate taxpayer, you will not have to pay those relative top slices of income tax on your dividends if you’re invested in stocks and shares. This means if your marginal rate of income tax is 40% or 45% the savings can be significant.
The ISA allowance increases in line with inflation annually which means if you are a 40% or 45% taxpayer you can protect more of your dividends from tax each year. Individuals who have consistently maximised their ISA allowance over the years will have significant sums of money invested sheltered from capital gains tax.
Why not find out more about our ISA products and make the most of the new 2015/16 allowance?