We are now less than three months to the end of the tax year for 2014/2015, so with that in mind we wanted to remind you of the importance of utilising your NISA allowance.
The first important point to note is that any unused allowance doesn’t roll over – so if you don’t use it, you lose it forever. It is therefore sensible to fully use your NISA allowance if you can afford to do so.
Here are some key points about NISAs:
- Income and capital gains are tax free;
- Any interest received from holding cash in a Stocks & Shares ISA is now tax-free;
- The current NISA allowance for this tax year is £15,000 and will rise to £15,240 on the 6th April for the 2015/2016 tax year;
- There is now improved flexibility with NISA compared with the old ISAs, you can now split the NISA allowance between Cash and Stocks & Shares in whatever combination;
- With a new NISA account you can transfer from your old Cash ISA to a Stocks & Shares ISAs, and vice versa;
- Up until 2nd December 2014, in the event of your death your NISA and ISA ended and the tax advantages immediately ceased. As a consequence, after your death it was necessary for the Administrator or Executor of your Will to account for any income or capital gains tax that subsequently arose. However, from 3rd December 2014, NISAs and ISAs can now be inherited tax free by a surviving spouse or civil partner on the death of the NISA and ISA holder;
- You need to be a UK resident aged 16 or over to open a Cash NISA, or aged 18 or over to open a Stocks & Shares NISA;
- For those under 16 a Junior NISA account can be opened with an annual allowance of £4,000 per tax year; and
- From 6th April 2015 old Child Trust Funds can be transferred to Junior NISA accounts.
As you can see NISA and ISA accounts are extremely flexible and tax efficient and we would recommend they should be used as a cornerstone of your financial planning.
As always if you would like any help in deciding how to utilise your NISA allowance, then please do contact your Cullen Wealth Consultant.