What is the ISA Allowance for 2018/2019?
What is the ISA Allowance for 2018/2019?
Since their introduction at the dawn of the new millennium, ISAs have proven to be a popular means of investing and saving money for many across the UK. In 2015/16 it was recorded by government officials that 12.7 million adults were using an ISA of some sort. Whilst a fairly common method of investing or saving your money, ISAs are- to a lot of us- a relatively strange and unfamiliar beast. How much can you invest into an ISA? Does the amount that you can invest change year on year? What is the ISA allowance for 2018/2019? With so many questions, as you may expect, comes a number of beleaguered individuals trailing close behind them. This doesn’t have to be you (providing you don’t mind conducting a little bit of research!).
In fact, over half of adults In the UK say that they are unsure as to how an ISA actually works. This eye-opening research from Opinium stresses a general unawareness surrounding ISAs and what they can potentially offer the every day investor. To further demonstrate the financial knowledge gap in the UK, a recent survey conducted by Barclays outlined that 9 out of 10 people were unaware that ISA allowance had actually changed.
If you didn’t already know, there is a limit to the amount of money that you can invest in an ISA over a year, regardless of what type it is. This is what’s known as your annual ISA allowance. The allowance for the 2018/19 tax year is £20,000. Of this amount, you can invest into any number of different ISA types (providing that you don’t invest in any more than one of the same type). Whilst the 2018/19 ISA allowance may already be set in stone, there’s every likelihood that it could increase or decrease over the next few years. It was only last year after all that the ISA allowance was raised significantly: from £15,240 to £20,000. These limits are reviewed by the government on a yearly basis, so don’t get too comfortable!
Investment ISAs- are they different?
When it comes to investment-based ISAs confusion can run rampant; although, it’s not half as bewildering as you might think. As with any ISA, ISA allowance for investment ISAs in 2018/2019 is exactly the same. This limit is generally applied to all ISA types.
So what is an investment ISA? Investment-based ISAs are ISAs that generate growth and/or income off the back of investments. This type of ISA typically generates more growth and/or income than cash ISAs but are accompanied by a higher amount of risk. Investment ISAs are a great option for investors looking to earn higher rates than what the UK banks are currently able to offer, provided they are comfortable with the associated risks.
A new breed of investment ISA
The rapid proliferation of peer to peer lending birthed a new type of ISA; one that was able to offer higher interest rates, and different types of assets. the advent of the Innovative Finance ISA– a new breed of ISA that allows investors to benefit from tax-free interest on peer to peer loans. Innovative Finance ISAs are considered to be completely independent to cash ISAs and stocks and shares ISAs in relation to the ratio of risk and reward. They are often imagined as sitting somewhere in the middle ground.
It is important, however, to bear in mind that investing comes with inherent risks. These must be understood, no matter the investment.
At The House Crowd our Innovative Finance ISA allows investors to invest their capital ‘hands-free’ across a range of peer to peer loans. Those that invest in the Innovative Finance ISA can benefit from automatic investing, and don’t have to worry about selecting individual loans.
Reasons you should use an Innovative Finance ISA
1. Rates are higher than what the banks can offer
According to Moneysupermarket as of March 2018, the Single Access ISA from Nationwide Building Society pays the highest interest rate of available cash ISA’s at 1.3% p.a. subject to terms and conditions. This when contrasted to The House Crowds’ Innovative Finance ISA which offers an interest rate of 7%* p.a. is a substantial difference. Bear in mind however, as a rule of thumb, the higher the interest the rate, the higher the risk. Note especially that the Innovative Finance ISA is not covered by the Financial Services Compensation Scheme (FSCS).
2. Supplement your existing income
Sometimes it’s nice to be able to indulge in the finer things in life. Unfortunately, for many of us, life can get in the way. By using the IF ISA as a vehicle to supplement your existing income, being able to afford these little indulgences could be that much easier.
3. Plan for your future
With The House Crowd’s Innovative Finance ISA, you will earn an interest rate of 7%* tax-free and receive your payments twice a year; it could be a great way to invest for your future and help to build your nest-egg.
By investing in The House Crowd’s Innovative Finance ISA you are effectively spreading your risk by diversifying your capital over a portfolio of peer to peer loans. By spreading your capital over a variety of different loans, you are investing in both higher risk and lower risk investment opportunities. This way, you’re not putting all your eggs in one basket- or playing chicken with fate.
5. You can transfer your existing ISA
As of September 2018, The House Crowd are able to accept ISA transfers. This means that if you already have an existing ISA with another provider, you are now able to transfer to The House Crowd’s Innovative Finance ISA.**
So now that we know the answer to ‘what is the ISA allowance for 2018/2019? we can start to look at what’s on offer. ‘If you are looking to invest your capital hands free and earn 7% p.a.* The House Crowd’s Innovative Finance ISA could be the right choice for you. If you would like to find out more about our IF ISA or other automated investment products such as Auto-Invest, contact our dedicated member support team who would be more than happy to help.
**There is no fee for a transfer from another ISA manager for amounts of £5,000 and over. For amounts lower than £5,000 there is a £50 admin fee which will be deducted from the amount transferred over. There is a minimum £1,000 amount that you can transfer over, before fees. Transfers in do not need to be in £1,000 increments, so you can for instance transfer in amounts such as £5,261.55.