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Independent financial adviser welcomes changes to ISAs

Independent financial advisers like Christine Tarran will be busy post-Budget, as people seek help to find the best way to manage their money over the short, medium and long-term.

Christine, of Darlington-based Tarran & Co and Her Invest, noted that prior to the Budget, there were widespread rumours that Chancellor Rachel Reeves would significantly reduce Cash ISA allowances.

However, the allowance remains at £20,000, with an important change.

Individuals under 65 must allocate at least £8,000 of this allowance to stocks and shares, rather than holding the full amount in cash, while those aged 65 and over retain the full £20,000 Cash ISA allowance.

Christine said: “There are far too many people who have got to much money in cash, which could potentially be working better for them if invested, because, while cash rates have been decent, they are starting to come down.

“I think encouraging people under 65 to invest in the stock market, with £8,000 of the £20,000 Cash ISA allowance being designated to investment in stocks and shares, is potentially a good thing, while those over 65 keep the £20,000 cash allowance.”

Christine adds that the decision on where to put your money is an individual one, as it “all depends on what the savings are for and the time period” in which individuals are going to require access to their savings.

That’s why it’s a good idea to seek independent financial advice at any time, not just in response to a Budget.

“Anything that encourages people to invest longer term in the stock market could be a good thing, as this may potentially deliver stronger medium and longer-term returns,” Christine said.

“That said, investments can go down as well as up, and you may get back less than you invest.

“It’s potentially good that the Chancellor maintained the £20,000 ISA allowance, even with the new requirement for younger savers. She could have reduced it entirely.

“People still have a £20,000 allowance, it’s just that younger people can’t keep it all in cash.”

Christine also cautions against people “missing out” on this allowance by keeping cash in the bank rather than investing it in an ISA.

She said: “It’s really good for people to look at what money they have got and keep some for the short term and emergencies and then consider investing anything they have over and above that.

“This has the potential to give them a better medium and longer-term return, although investments can go down as well as up and you may get back less than what you invest.

“I would encourage everyone to look at where they invest and how they invest and look to take advice, so that they can potentially get a better longer-term return. This also helps business.”

Overall, Christine says the Budget “wasn’t as bad as what we thought it would be” for ISAs, but for tax on investments, we will need to wait for further details.

“Any taxes on property, income and dividends will hit a lot of people and salary sacrifice will affect what people are able to pay into their pension, so now is a good time for people to seek independent financial advice about their unique circumstances,” she said.

Disclaimer: This information is for general purposes only and does not constitute personal financial advice.

Tax treatment depends on individual circumstances and may change in the future.

This was posted in Bdaily's Members' News section by Sarah Walker .