Sorting out the family ISAs

Graphic of a family being kept safe by financial planning and saving into family ISAs

Savings

Julie Hutchison

10th March 2015 at 2:23pm

Are you making the most of your savings as a family? Planning your finances together not only makes good practical sense – it means you can make the most of the tax allowances available as a household.

ISAs

Take ISAs for example.

These are tax efficient saving or investment accounts where you pay no income or capital gains tax.*

If you’re part of a couple – married or with a civil partner – either of you can transfer money to the other to help them make full use of this year’s allowance, which is £15,000 for the tax year ending 5th April 2015. That’s £30,000 of savings you can build together.

Saving for children

And if you’re wanting to save for children, keeping that money inside your own ISA means you are in control of when it gets handed over.

That is different to using a Junior ISA or Child Trust Fund where your teenager gets access to their money at age 18, which you might not favour! You can use your own ISA to save for you, with a notional ‘pot’ for children in your own ISA, which you remain in full control of since it belongs to you.

If a couple can use both ISA allowances as fully as possible, it means more of your family money has the potential to grow as tax free savings. * It’s a smart way to save for your life together.If a couple can use both ISA allowances as fully as possible, it means more of your family money has the potential to grow as tax free savings. * It’s a smart way to save for your life together.

ISAs to get a boost from 6th April 2015

There’s more good news ahead for ISA savings. From 6th April 2015, the ISA allowance goes up to £15,240.

The benefits of ISAs for married couples and civil partners are also due to last longer, as the Government is expected to bring in a new inheritable ISA allowance.

When someone dies on or after 3rd December 2014, the value of their ISAs at the date of their death will become an inheritable ‘enhanced’ ISA allowance for the surviving spouse or civil partner, when the new rules apply from 6th April. For those couples who have planned their savings together, this means the tax benefits of saving last longer.

We’ve certainly taken ISAs to heart since they were launched 16 years ago, judging by the £470 billion of savings we have put into them over the years. If you haven’t already done so, there’s still time to make the most of the way you save together or as a family before 5th April.

This blog and any responses to comments are not financial advice. A Stocks and Shares ISA is an investment. Its value can go up and down and it may be worth less than you paid in. Laws and tax rules can change in the future and this blog reflects our understanding at today’s date.

*Dividends come with a notional 10% tax credit, which isn’t refundable, but no tax has actually been deducted.

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