By ADRIAN LOWCOCK 08/10/2009
The raising of the ISA limit to £10,200 was one bright spot amidst the bad news within the 2009 Budget and the prospect of further tax rises.
The higher allowance has breathed new life into ISAs and has made them the first port of call for all investors and savers.
ISA rules for those aged 50 or over
If you are 50 or over before 5th April 2010, you will be able to enjoy the new £10,200 allowance in the current (2009/10) tax year. You can choose to allocate up to half of your allowance (£5,100) to a Cash ISA or place all of it into investments through a Stocks & Shares ISA. If you were born after 5th April 1960, you will have to wait until next tax year to benefit from the higher allowance.
Tax advantages of ISAs
Income Tax will be 50% for the highest earners, from the start of next tax year, which means that the tax advantages of ISAs are now more valuable than ever, especially for sheltering income from corporate bonds. The tax credit normally deducted from such income is reclaimed within ISAs, meaning the net value of that income could be double that received outside of a tax wrapper.
Cash ISA transfers
If you had taken out a Cash ISA (perhaps originally in the form of a TESSA) then you can switch this into a Stocks & Shares ISA. With interest rates on cash currently very low, this may be a tempting option. You should be aware that this process cannot be reversed. If you would like to transfer, please call one of our advisers on 020 7189 9999 to request a transfer application form.
How can we help?
If the new ISA rules for 2009/10 are applicable to you, you can invest online or top-up your existing ISA in your Bestinvest client centre. Alternatively, you can call one of our advisers on 020 7189 9999.