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Points of View: ISAs and the end of the tax year

With 5 April fast approaching, there are just over two weeks in which to complete Individual Savings Account (ISA) subscriptions for the 2014/15 tax year.

Introduced in 1999, ISAs replaced Personal Equity Plans (PEPs) as a type of wrapper allowing adults resident in the UK to hold a wide range of assets free of tax on dividends, interest and capital gains. Due to this preferential tax treatment, subscription limits are in place each tax year; up to £15,000 for 2014/15 (i.e. 6 April 2014 to 5 April 2015), increasing to £15,240 for 2015/16. Transfers between ISA providers do not contribute towards these limits. 

It is also worth noting that the rules regarding ISAs have been simplified so as to allow greater flexibility. Investors may now include shorter term fixed return instruments and the shares of certain smaller companies in their ISAs. Further, from 6 April, the government has confirmed that, on death, individuals will be able to pass on their ISAs to their surviving spouse or civil partner. This will be via a one-off additional allowance equivalent to the total pot at the date of death.

In general, any unutilised ISA allowance does not roll over. It is therefore time critical for eligible ISA investors to complete contributions promptly, leaving plenty of time for funds to clear in good time before the end of the tax year.  In particular, investors should bear in mind that 5 April falls over Easter on a Sunday this year.

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