Waveney McKenna

After over a decade of inflation the Government has finally increased the amounts you can save into ISAs. From October 2009 all those aged over 50 can invest up to £10,200 in the current tax year. This increase applies for all from April 2010 making this a useful alternative long term savings vehicle to pensions (although no tax relief is available on payments into ISAs).

Via a fund supermarket you are able to access a wide range of investment options within one plan, these include active and passive funds across a range of asset classes and geographical areas. For those in retirement there is the ability to move into income producing funds and have income paid on a regular basis, such income does not need to be disclosed on your tax return and does not affect your age related allowances.

Many individuals have saved into mini cash ISAs in the past, with interest rates currently relatively low it may be useful to assess whether to move into a stocks and shares ISA in order to increase the potential for higher returns compared to cash. This is dependent on your risk profile and objectives and advice should be sought.

Whilst, unlike pensions, contributions into ISAs do not attract tax relief, once invested there is no tax on any growth. Fixed interest returns are tax free and there is no additional tax charge on dividends. As with pension funds, the 10% tax credit on dividends cannot be reclaimed.

If you are not making use of your ISA allowances then do call us with any queries.