Protect your ISA

Everyone has the right to a protected financial future. With Brexit looming and signs of an economic slowdown, it seems prudent to protect any savings and investments from tax and falling markets.

ISAs are a financially savvy and tax efficient way of investing, with over £8 trillion being transferred to some form of ISA in the last 20 years.1

High street ISA offerings however have been looking less than exciting over the past ten years, with with interest rates falling by more than half from 2.56% in 2009, to 0.94% in 2019.2 Add rising inflation to the mix, and savings could potentially reduce in value.

Jan 2009 Jan 2018 Jan 2019
Instant access cash ISA 2.56% AER0.73% AER0.94% AER
Fixed 1 Year cash ISA 3.43% AER1.08% AER1.35% AER

Many people think ISAs are complicated.  However, they’re actually much more manageable than their reputation suggests and whether you’re thinking about investment or saving plans, most ISAs are simple to set up, highly flexibly and more importantly, tax free.

The main benefit of all ISAs is that they give you the freedom to save or invest without paying any tax on the savings.  Any UK resident over 16 can open a cash ISA and from the age of 18, you are able to open a Stocks and Shares ISA, Lifetime ISA or an Innovative Finance ISA.

The amount you are able to put away in an ISA is capped each tax year, which always ends 5th April, and the allowance is non-transferrable each year. These annual ISA allowances do not include the total amount invested in your ISAs from previous tax years, or the money you earn from your investments.

With the ISA allowance for the current tax year at an all-time high of £20,000, the opportunities and potential from alternative saving solutions have never been better.

Tax year starting 6th April Overall Subscription Limit Cash ISA Limit
2008-09 £7,200£3,600
2009-10 £7,200a/£10,200b£3,600a/£5,100b
2010-11 £10,200£5,100
2011-12 £10,680£5,340
2012-13 £11,280£5,640
2013-14 £11,520£5,760
2014-15 £11,880c/£15,000d£5,940c/£15,000d
2015-16 £15,240£15,240
2016-17 £15,240£15,240
2017-18 £20,000£20,000

a Applicable to those aged under 50.
b Applicable to those aged 50 and over from 6th October 2009.
c Limits until 30th June 2014
d The cash and overall subscription limits were raised to £15,000 from 1st July 2014 with the introduction of the New ISA (NISA).

So for example, if you were to invest £15,000 in an ISA in the 2017/18 tax year, you could still invest an additional £20,000 in the 2018/19 tax year. The lack of tax payment means you’d be building on all investment over the years.

However, despite the impending deadline of this years tax year, a recent study by the FCA3 revealed 70% of us don’t invest at all and therefore don’t take advantage of ISA benefits, whilst 78% of adults who do, would rather be “safe than sorry”, and hence are reluctant to transfer their nest eggs elsewhere.

This reluctancy seems to stem from a history of red tape around saving accounts, a seemingly unreachable, locked investment limits, and of course, the low interest rates linked to what could be easily accessible accounts.

With current political uncertainty and low interest rates, it can feel like the financial markets are difficult to navigate. It is now possible to move investments over to products where you can protect the majority of your initial investment, as well as any future portfolio growth.

At i-stock we have an investment funds list which offers strategies such as this. Running an i-stock account is absolutely free, meaning every penny deposited can be invested, unlike normal investment funds that charge management fees from the net value.

With this market fluctuation in mind, i-stock has 24/7 accessibility, allowing investments to be withdrawn or deposited at any time, with no penalty fees. In essence, the product ensures a lock-in of potential profit and a lock-out of potential losses.

 

Uncertainties and doubt do not need to go hand in hand with investing. With these factors removed, it’s possible to maintain one’s right to a protected financial future.

3 Source: The financial lives of consumers across the UK. Key findings from the FCA’s Financial Lives: FCA. (2017)