New, Fully Flexible ISAs
Chancellor Osborne has changed the ISA market with his plans for fully flexible ISAs. Currently, if you take your money out of an ISA, it is gone from your annual taxable allowance for that year. So you can’t benefit from the tax-free growth from that money.
We are to move to a more flexible ISAs system which will allow contractors to withdraw the money and invest the cash again in that tax year. This would not affect their annual allowance or the chance to get tax-free growth from the money.
The previous Budget saw the NISA introduced with a flat allowance of £15,000 which will increase to £15,240 this year.
This is the first time ever that savers can touch their ISA. It means that contractors can take some money out if they need it, say if they were not working. They can then put it back in to the fully flexible ISAs when they start work again. They would now not lose the tax benefits.
Basic rate taxpayers can get a tax-free allowance of £1,000 on any returns on savings which are held outside their ISA. This saves them 20% in tax.
Many contractors on basic rate tax will put money from their ISA allowance into equities to benefit from the long-term growth of their equities. Also, any cash savings can now grow tax efficiently in a normal bank account.
Higher rate taxpayers will get an allowance of £500. That’s so they don’t benefit from cuts for basic rate taxpayers.
Savings From Flexible ISAs
New flexible ISAs will now mean that non-ISA interest rates will no longer, effectively, be reduced by poor tax advantages.
The fully flexible ISAs are a very important chance for contractors in the UK and their finances. It would be a shame if contractors didn’t take advantage of them to make the correct tax gains and savings from them.
To take advantage of fully flexible ISAs or to find out more, fill in the form below.