Essential Changes for Savers and Investors: New Tax Year 2017/18
Individual Savings Account (ISA)
ISAs can be one of the most effective ways to build savings and investments over time and with the allowance for all UK residents increasing to an all-time high of £20,000 this year – alongside the introduction of the Lifetime ISA (LISA) – there are two changes to take into consideration.
NEW LIFETIME ISA (LISA)
Lifetime ISAs encourage those who are between the ages of 18 and 39 to save and invest for their first property or retirement. In effect they are a hybrid of the Help to Buy ISA and a pension. You can save up to £4,000 in a LISA this tax year and the Government will add 25p for every £1 you save. Therefore if you were to make use of the full amount and save £4,000 by 5th April 2018, you would have £5,000 saved in total (before you take into consideration any interest or returns that may have been generated).
18 (adult ISA)
Opened from birth
39 to open, 49 to contribute
75 (for tax relief)
Basic rate tax relief on contributions @20%
Higher rate tax relief on contributions
Tax free growth within the wrapper
Government bonus on contributions @20%
Yes, capped at £1,000 per year (£32,000 total)
First 25% only
Subject to conditions*
From 55 (57 from 2028)
25% of total fund
25% or 55% (this charge is only payable on the value of the pension which is over and above the Lifetime Allowance of £1m)
You can find out more about LISAs and how they compare to other saving and investment options here or you can download our latest Tax Effective Savings Guide here.
ADDITIONAL PERMITTED ISA SUBSCRIPTIONS
PROPERTY INCOME ALLOWANCE
RENT A ROOM RELIEF
THE RESIDENCE NIL RATE BAND (RNRB)
Please note that the information above does not seek to cover all the changes and cannot be considered as a substitute for advice. As tax treatment depends on your individual circumstances and may be subject to change in the future, please consult your Investment Manager or our Tax & Trustee Services team on [email protected] for further information.