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The new help to buy ISA will be available from 1st December 2015. This ISA will allow people aged 16 and over to save up to £200 per month, on top of an initial investment (up to £1,000), towards a deposit on a first property purchase.
Where an individual saves £12,000 into the help to buy ISA, the government will boost those savings by 25% to £15,000 when used for a deposit on the purchase of a first property. The tax free bonus will be limited to a minimum of £400 (maximum of £3,000) and will be available on UK properties up to a value of £450,000 in London and up to £250,000 in other parts of the country.
Because the help to buy ISA is per individual and not per property, if a couple save a deposit of £24,000 equally between them, they would receive an additional £6,000 from the government. Each first time buyer can only open one help to buy ISA during the lifetime of the scheme.
Payments made to a help to buy ISA count against the individuals annual limit and because it is effectively a cash ISA it means that another cash ISA cannot be opened. However, a stocks and shares ISA could still be opened, into which you could invest into cash following recent ISA reforms.
The new account will be available for 4 years from 1st December 2015, but there is no limit on how long the account can remain open.
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Do you have or are thinking about an ISA? The type of ISA, whether Cash or Stocks & Shares, that is right for you will largely depend on how long you want to invest for and how much risk you are willing to take.
Cash ISAs
- Good if you want to invest for less than five years, or where you don't want to take any investment risk*.
- Interest will be added to your Cash ISA every year or more frequently.
- Normally allow instant access to your investment, but if you do have a fixed term account you may lose interest if you make a withdrawal before the term is up.
- No investment choice. You receive interest on your savings at a fixed or variable rate.
- You can invest up to £15,000 in the 2014/15 tax year and you can split this between a Cash ISA and Stocks & Shares ISA as you wish.
Stocks & Shares ISAs
- Good for investing for five years or more, and when you want to share in the potential growth in stockmarkets.
- The value of your ISA can fall as well as rise depending on the performance of your investments.
- You are able to make withdrawals from your ISA and this is usually within 8 to 10 days.
- You can choose from a wide range of investments including funds, trusts, bonds and individual shares to be held within your ISA.
- You can invest up to £15,000 in the 2014/15 tax year and you can split this between a Cash ISA and Stocks & Shares ISA as you wish.
If you have any queries regarding your investments our Independent Financial Advisers are always happy to answer your questions, we offer 'no obligation' initial meetings and can help you find the perfect fit for your situation.
* If the inflation rate is higher than the interest rate you receive then even though you will see an increase in the value of your investment, it will be eroded in real terms.
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