ISA allowance

[chris-suffolk]

There is no limit for total amount. But £20k is the max you can pay in each tax year.

I thought that the Govt had introduced and extra £10k allowance on top of the £20k, but only if invested in UK companies. Not sure if it got through the budget, so may not actually exist.

 

[SpokeyDokey]

Nearly correct. There is also a £5k allowance on top of your personal tax allowances, that gets reduced by £1 for every £1 you earn over the allowance. So most people will lose it quite quickly, but if you don't work, but have substantial savings it can make a big difference. We have over £100k in my wife's name and pay no tax on the interest. It means somebody at about the personal tax allowance gets £6000 of tax free savings interest.

This is an oft overlooked allowance.

I make full use of this via Mrs SD to minimise tax payments. Our savings/investments total split percentage is moderately biased towards her although we still end up paying tax on interest which is irritating as the principal was previously taxed heavily - but them's the law.

 

[SpokeyDokey]

I thought that the Govt had introduced and extra £10k allowance on top of the £20k, but only if invested in UK companies. Not sure if it got through the budget, so may not actually exist.

It is an additional £5k pa. It will be launched some time after a consultaion period, re how it works, ends in June this year.

 

[SpokeyDokey]

Yes, but it must be clear that these funds belong to the named account holder. If you set up a second ISA in a partner's name, the money is theirs. You can't place any claim on it, should anything happen that sees you arguing over money.

This is a good point and one which applies to any account of any type that is held in one half of a couples name.

It is worth mentioning that married couples will inherit each others ISA's subject to the terms of a Will or to the laws of Intestacy if their is no Will.

In our relationship all our various pots are considered ours ie our money is pooled. We would deem it a fundemental breakdown of our relationship if one or the other decided to go their own way with their individual named accounts.

Interestingly, their is a quirky inheritance rule that can massively boost a surviving partner's ISA allowance the year following their partner's death:

https://www.gov.uk/individual-savings-accounts/inheriting-an-isa-from-your-spouse-civil-partner#:~:text=directly to them-,You can inherit their ISA allowance.,civil partner's ISA for details.

 

[Profpointy]

I'm not on the basic rate, although looking at the bikes I ride you might think I am

But yes, suitable advice to split it across different elements @Sterlo . I'm using a Stocks & Shares ISA with Vanguard, which a set monthly amount goes into, plus an additional cash ISA elsewhere which I've been adding to as I can.

Just note that if the worst happens to you it's better not to be over the probate threshold for each financial provider you're with. Also, annoyingly as I've found out recently as my Mum's co-executor, these differ widely. And because we're over the probate threshold for an ISA with one we're having to go through probate for all - which means my Dad can't do anything with the house or her monies until it's all sorted.

What does "probate threshold" mean?
Surely you still have to have probate even to access the fifteen bob left in your granny's old war bonds account.

 

[SpokeyDokey]

What does "probate threshold" mean?
Surely you still have to have probate even to access the fifteen bob left in your granny's old war bonds account.

AFAIK there is no legal basis for a probate threshold - it varies between different financial entities.

Generally, in very small estates eg sub £10k, probate is not even considered.

 

[vickster]

I already bank with Nationwide, and have a couple of bonds with them. Will most likely do an ISA with them, just to keep things easy.

Bonds you have to pay tax on the interest above your personal allowance (around £13k IIRC + £1000/£500 savings allowance)

 

[Moodyman]

I thought that the Govt had introduced and extra £10k allowance on top of the £20k, but only if invested in UK companies. Not sure if it got through the budget, so may not actually exist.

As pointed out by @SpokeyDokey it’s £5k above £20k and is only an idea at the moment. If and when it launches is still unclear, so I’d work to the £20k limit for now.

 

[ebikeerwidnes]

When it comes to savings, just plenty of reading up (plus Money Saving Expert). I work too hard for my savings without having to pay tax on any interest I earn, so I made sure I was clued up and move money about so that I get the best returns without the tax burden. I was hoping that they might increase the ISA limit but nothing yet.

not really sure why someone needs to save over £20,000 a year and thinks they need a tax break to do it - but lets not get all NACA

Logically it does not make a lot of sense that it was introduced at a specific amount and then has not been increased in spite of salaries and prices going up significantly in the meantime

 

[DCLane]

What does "probate threshold" mean?
Surely you still have to have probate even to access the fifteen bob left in your granny's old war bonds account.

You don't need to formally apply for Grant of Probate unless their total estate over £5,000 or it's going to a spouse/civil partner. Yes, the executors need to demonstrate that the contents of the will have been executed properly, but no probate requirement.

However, needing to go through probate - which I'm now doing so my Dad can have access to the joint house, joint savings and my Mum's ISA's - will depend upon each financial institution's probate limit; e.g. the Nationwide has set it at anything above £50,000 needing a Grant of Probate, whereas for the Nottingham Building Society it's just £30,000. Knowing that would have been useful last year but it's far too late now.

This site lists the current probate limits between £5,000 and £70,000 at a range of providers: https://www.settld.care/what-are-th...rant-of-probate-for-financial-services-firms/

 

[Alex321]

not really sure why someone needs to save over £20,000 a year and thinks they need a tax break to do it - but lets not get all NACA

Logically it does not make a lot of sense that it was introduced at a specific amount and then has not been increased in spite of salaries and prices going up significantly in the meantime

It wouldn't make logical sense, but that hasn't happened.

When it was introduced in 1999, the limit was £7,000 (of which £3000 could be in cash ISA). It was raised to £7,200 in 2008/9, £10,200 in 2010/11and more raises since, reaching the current limit of £20,000 in 2017.

 

[ebikeerwidnes]

It wouldn't make logical sense, but that hasn't happened.

When it was introduced in 1999, the limit was £7,000 (of which £3000 could be in cash ISA). It was raised to £7,200 in 2008/9, £10,200 in 2010/11and more raises since, reaching the current limit of £20,000 in 2017.

Thanks - I missed the rises - probably as I didn;t have spare money at the time

I do remember it started with a TESSA thingy many many years ago (when I earned more and had fewer outgoings!) and had a limit of £3000 a year
The ISA replaced it but I didn;t know the details at the time and it was £20,000 when I first came across it

 

[ricknmorty28]

Incorrect

£20K is your max annual contribution

yep this is correct

 

[Chislenko]

not really sure why someone needs to save over £20,000 a year and thinks they need a tax break to do it - but lets not get all NACA

For some it is not 20k being saved every year but 20k they already have in savings accounts which are taxable so it makes sense (to me) to move 20k into an ISA each year. Myself and Mrs. C have just moved ours for this tax year.

I would add though we don't use ISA's etc to save we have all our accounts set up as monthly pay away into our current accounts and we spend the interest rather than "watch it grow"

Just as a point of interest does anybody else on here adhere to the 85k FSCS limit and consequently have multiple accounts with different banks / building societies?

 

[Slick]

For some it is not 20k being saved every year but 20k they already have in savings accounts which are taxable so it makes sense (to me) to move 20k into an ISA each year. Myself and Mrs. C have just moved ours for this tax year.

I would add though we don't use ISA's etc to save we have all our accounts set up as monthly pay away into our current accounts and we spend the interest rather than "watch it grow"

Just as a point of interest does anybody else on here adhere to the 85k FSCS limit and consequently have multiple accounts with different banks / building societies?

Yes, I spread a bit of cash by opening a number of new accounts to keep below the 85k.

It was only ever intended as a short term solution, but I think we ended up with these accounts for a couple of years before finally settling on a better home for the cash.