ISA Dealine looming - 2009-03-01



The end of the tax year is fast approaching and as ever we are encouraging clients to make sure they are using their tax allowances before they disappear. One allowance that will be lost if not used before 5th April is the 2008-2009 tax year ISA allowance.

ISAs are an important investment tool as they allow investments to be shielded from Income and Capital Gains Tax. A persons ISA allowance is currently £7,200 for each tax year, which can include up to £3,600 in a cash ISA. The balance is can be held in investments, and we typically use unit trust or OEIC funds with clients for this purpose.

We find that investors who fully utilise their ISA allowances can over time build up large cash and investment portfolios which can provide very significant tax savings over the long-term. The ability to take tax efficient income and capital from ISAs later in life can help future planning goals including children’s education costs, moving house and retirement.

Whilst returns from Cash ISAs have fallen in line with interest rates, Cash ISAs still offer some of the best deposit rates available and all interest is paid free of tax. Cash ISAs are great homes for people’s emergency funds and longer term, low-risk savings.

In terms of investment ISAs, now may be a great time to look to utilise your ISA allowance as stock markets have seen significant falls in recent months. We believe that the low levels of stock markets present may present excellent value for longer–term investors willing to accept some investment risk. Of course it is worth reiterating that Investment ISAs should be considered long-term investments as they can and will be volatile in the short-term.

Should you wish to discuss your ISA options, please contact an adviser on 01473 255948. There are a multitude of options to suit each type of investor, but it is important to bear in mind that if you do not act before 5 April, your allowance for the current tax year will be lost!