Autumn 2023

ISAs regain their investment appeal

Individual Savings Accounts (ISAs) are attracting greater attention from investors.

Next April ISAs will reach their 25th anniversary. Over the years the appeal of ISAs has waxed and waned due largely to two main factors: the tax environment and potential investment returns.

In 2023, these factors mean ISAs may once again rise in popularity:

■ Prolonged freezes to the higher rate tax threshold and personal allowance reductions to both the dividend allowance and capital gains tax annual exempt amount and a lower threshold for additional rate tax have made the UK tax shelter offered by ISAs more attractive.
■ Improved share market conditions and higher yields from fixed interest securities (bonds) will improve the appeal of stocks and shares ISAs.

The government’s attention meanwhile has been elsewhere – the main ISA contribution limit of £20,000 has been unchanged since April 2017.

“Improved share market conditions and higher yields from fixed interest securities (bonds) will improve the
appeal of stocks and shares ISAs.”

If you have existing ISAs, it is important that you review them regularly to maximise the tax benefits and ensure continued suitability. If you have cash ISAs, that review includes considering whether switching to a stocks and shares ISA would be appropriate. Even at today’s higher interest rates (not always passed on to cash ISA savers), the returns are well below the current inflation rate.

Seeking advice is important for stocks and shares ISAs, not only regarding fund selection, but also in balancing the holdings with other investments owned directly or within your pension.
✢ Investments do not offer the same level of capital security as deposit accounts. The value of your investment,
and the income from it, can go down as well as up and you may not get back the full amount you invested.
Past performance is not a reliable indicator of future performance.

Investing in shares should be regarded as a long-term investment and should fit with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual
circumstances and is subject to change.

In this issue:

Beyond a minimum retirement

The dividend or bonus decision

National Savings Certificates update

Growing your investment income

Caught in the higher rate taxpayer rise?

Managing your pension legacy

Funding a university education

News round up