What is a New ISA (NISA) and why should you use one?
What is a New ISA (NISA)?
NISA stands for New Individual Savings Account, so it’s just a new form of the previous ISA.
Contrary to many people’s thinking, an ISA has never just been a cash savings account with your bank. In fact there used to be two types of ISA:
1. A Cash ISA; and
2. A Stock & Shares ISA
This distinction has now been removed, giving us the NISA! This means that you can have both cash and investments in your NISA, in whatever proportion you wish.
The NISA allows you to invest in a tax advantaged environment where you pay no capital gains tax on the growth of your investments and no further tax on income received (there is however currently a 10% ‘withholding’ tax on dividend income which always has to be paid).
If you hold investments outside of a tax wrapper such as a NISA, the growth may be subject to capital gains tax and income received will be taxed at your marginal rate of income tax. These tax savings are a huge advantage when saving over the long-term as tax paid from year-to-year can really eat into your investment returns. The other great thing is that you can take money out of your NISA whenever you wish and there is no tax to pay on the amount withdrawn!
Up until 5th April 2015 you can put £15,000 into a NISA, which increases to £15,240 in the 2015/16 tax year, so you can build up quite a large tax-free savings pot! You also don’t have to invest a lump sum in one go, you can save regularly from month-to-month.
The Strawberry Investor Direct NISA
Gone are the days when to buy investment funds or shares you had to go directly to a stockbroker, bank or financial adviser. Technology now allows you to buy and sell investments yourself online at the push of a button at a very low cost, and that’s where Strawberry comes in. It allows you to:
- Invest into all UK main market and AIM shares
- Invest into a large range of investment funds
- Invest up to the HMRC NISA limit each tax year and to transfer in previous years ISAs (including cash ISAs) if you wish
- Save regularly by setting up a direct debit into your account
So why not open a Strawberry NISA today and start saving for your future?