Nicer NISA’S

Posted 13/10/2014

Flexible Investment Choice and Inheritance Tax advantages.

From 1 July 2014, ISA’s became New ISA’s (NISA’s) and now have more flexible and advantageous features.

NISA’S are simply tax wrappers which can hold cash and/or stocks and shares investments so that they are sheltered from tax. NISA’s are efficient for all tax payers, but particularly those who pay higher and additional rates. This is because the funds can grow within the NISA wrapper tax free which may provide for greater levels of investment returns. NISA’s can also provide tax free income to supplement taxable earnings and pensions.

The annual amount that can be contributed into an ISA has increased in the 2014/2015 tax year to £15,000 per eligible person. It is important to note that NISA’s cannot be held jointly and there are specific eligibility criteria on age and residency status.

It is now possible to hold each years allowance in cash, stocks and shares or a mixture of the two in any proportion, previously the proportion was fixed to 50% of the allowance for Cash ISA’s. It is also now possible to mix previous years allowances between cash and stocks and shares.

An ISA is a tax wrapper which cannot itself be inherited, however the underlying investments themselves can be. Since August 2013 it has been possible to invest in Inheritance Tax efficient ISA’s known as AIM (Alternative Investment Market) ISA’s. The AIM ISA holds shares in companies that qualify for Business Property Relief (BPR). This relief means that as long as the investor has held the shares for at least two years and holds them at date of death the investments should be free of inheritance tax currently payable at 40%.

For individual advice, please contact a member of our Financial Planning team on 0330 404 0773.