When the Individual Savings Account (ISA) was launched in 1999, the allowance was £3,000 for a cash ISA or £7,000 for a stocks and shares ISA each tax year. Now at the grand old age of 21, the overall allowance has risen to a generous £20,000.
In the early days, choice was limited to either a cash ISA or a stocks and shares ISA, but the range has been extended over time and the total investment of £20,000 can be spread across different types of ISA. Any investment growth is tax free.
First investment route – the Junior ISA
Junior ISAs (JISAs), introduced in 2011, can be opened by parents or a guardian with parental responsibility for a child from birth. Once opened, anyone can pay into the JISA, but the child is unable to access the cash until they reach the age of 18. The JISA annual allowance per child was almost doubled to £9,000 per tax year at the Budget in March.
ISAs have proved a popular investment choice over the years; recently released government figures show around 11.2 million adult ISA accounts and around 954,000 JISAs were subscribed to in the 2018–19 tax year, with new investments totalling around £67.6bn and £974m, respectively. Are you looking to invest tax efficiently, either through a lump sum investment or regular savings? If so, get in touch.
It is important to take professional advice before making any decision relating to your personal finances. Information within this newsletter is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.