Sunday, 29 March 2015

Cash ISA Allowance 2015

The Cash ISA Allowance 2015 may be of interest to those who like to save or as I like to call it invest their money into the only tax free savings account available in the United Kingdom. While the best ISAs do not offer great interest rates it is still beneficial to put your money in an account that does not require you to pay tax on your income (interest). There is always a chance in the future that the Bank of England base rate will rise and you will be able to earn higher rates of interest on the savings you have built up over the years. It is for this reason that I try to maximise my ISA savings each year.

Consider this, saving £15000 a year for 10 years gets you £150 000 before interest. If the base rate increased by 3% and you were able to get 4% on an ISA you would get £6000 return on that £150 000 savings. A fixed ISA could potentially give you more if you were prepared to not touch your money. £6000 is £500 monthly and it is all tax free. It would certainly make a nice pension pot.

The Cash ISA Allowance for 2015 is higher than that for 2014. It has now increased to £15240. Of course this can also be put in stocks as opposed to solely in savings. Currently you can get a much higher rate of return on stocks versus savings accounts but it is higher risk. If you do not like taking risks you may prefer to put your money into a Cash ISA. Some people split the risk and spread their money between the two types of ISA. I need my cash this year for a property investment so I am unlikely to be able to contribute much to my Cash ISA or Stocks and Shares ISA but I would like to put some more money into my dividend stock Royal Mail.

Will you use the full cash ISA allowance in 2015? If you plan to save the money evenly over a 12 month period you will need to put £1270 away each month. This is a large amount of cash but even saving £5000 a year into an ISA is beneficial. You can start adding to your new ISA from the 6th April 2015 when the new tax year starts.

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