ISA investments were introduced in April 6th 1999, there were instantly popular because of the tax benefits they offered.
Investors are becoming frustrated as of late as they have been subjected to a seris of changes making the tax-free accounts more complicated.
The system used for ISA’s was pretty simple, savers had two choices a cash Isa or a stocks and shares, if money was taken before the end of the tax year it could not be replaced.
Two new types being offered has further complicated matters.
A key feature of a certain type of Isa is “flexibility”, investors could withdraw cash when needed as long as it was replaced before the end of the tax year, allowing investors to keep tax added benefits. This perk of the Isa is not being honored by all providers, causing the current frustration.
Isa allowance is in 2017 is £20,000.
NEW TYPES OF ISA’S:
- Innovative Finance (also known as a “peer-to-peer” Isa). Investors offer unsecured loans to individuals and businesses through online crowdfunding investment platforms, tax benefits apply.
- Lifetime, the latest edition to the fold- limited availability from providers, £4,000 allowance per year, you can contribute until the age of 50. No penalties if money is used for first home, accessing money after age 60, or closing account before 5 April 2018 – otherwise a 25pc penalty charge is applied.
- Help to Buy, a type of cash Isa, First-time buyers can deposit £1,200 in the first month and £200 a month thereafter to put towards a home purchase. The Government then tops up savers’ money by 25pc (not all providers allow for a cash and help to buy Isa in the same year)
- Lifetime Isas
Criteria changes introduced April 2016 means investors can make withdrawals and replace the money in the same tax year without losing the tax breaks.
This is not a mandatory requirement so providers choose to offer the benefit or not.
If like a lot of people this has left you a little dazed and confused and just want a simply, safe, generous investment opportunity that does what it says on the tin, look no further.
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