Spring isn’t just about a rise in temperatures and the arrival of the Easter bunny, it’s also the start of the new financial year; now is the time to save all that you possibly can in your ISA (individual savings account) if you want to take advantage of your tax-free allowance. If you’re among the estimated two-thirds of the population that don’t have an ISA, discover below how these handy accounts can make saving money a good form of investment.
People that earn more than the minimum tax threshold are taxed at the basic rate on any income that is not exempt. Unfortunately for savers, the interest accrued from saved money is classed as taxable income, meaning that every year some will go to the government, unless you save it in an ISA. The 2014/15 ISA limit is £15,000, allowing you to save over £1,000 each month without needing to worry about paying interest.
Implication of the 2015 Budget
The chancellor’s recent budget statement indicated that from April 2016, savers on the basic tax rate will not need to pay interest on the first £1,000 of interest accrued on their savings each year, in addition to the tax-free interest they can always enjoy through using an ISA. This could potentially result in more appealing savings products coming onto the market, providing further opportunities for saving money profitably.
A new form of ISA will be operational by the autumn of 2015: the Help to Buy ISA. Designed to assist first-time buyers, investors will receive £50 for every £250 they save, up to a maximum bonus of £3,000. This represents a great opportunity to get your savings for a deposit off to a good start.
Despite the many benefits of ISAs, they are still not owned by the majority of the population. If you’re keen to save money and take advantage of the perks that the recent budget brings to savers, it’s worth taking the time to find out more about how an ISA could play a part in your financial planning.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk