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The end of the tax year is fast approaching and some of our clients are starting to think about ISAs for the 2012/13 tax year.
ISA allowances have risen again for the 2012 tax year, providing an additional incentive for savers. For the 2012/13 tax year, investors are able to save up to £11,280 in an ISA. From 6 April 2011, rises in the ISA allowance had been linked to inflation but, from April 2012, increases are based on the Consumer Prices Index (CPI) for the year to the previous September.
This can all be invested in a stocks-and-shares ISA, or up to half the amount – £5,640 – can be saved in a cash-only ISA. After investing in a cash ISA, any remaining allowance is then available for investment in a stocks and shares ISA. According to the Investment Management Association, net ISA inflows in 2011 were almost £3bn and research by the trade body has consistently suggested investors would invest more if the allowance was increased. Meanwhile, according to HM Revenue & Customs, more than 15.4 million individuals subscribed to ISAs in the last tax year. This was slightly higher than the previous year, when almost 14.9 million individuals subscribed. ISAs are tax-efficient vehicles that allow individuals to save and invest without having to pay income tax or capital gains tax.
ISAs can be a good way for people to start saving, or to add to their existing savings and investments. If you cannot afford to take advantage of the full annual allowance, it is still worth putting away what you can via a monthly savings plan, which can start from £50 a month. Do not forget one of the golden rules of ISA investing – if you do not use it, you lose it – so try and make the most of your allowance each year. For more information please do not hesitate to contact us.
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