Expats Urged To Take Up Tax Benefits Of New ISAs

The new UK ISA £15,000 savings limit comes into force in the UK for investors from July 1, 2014.

Financial experts are warning expats who still have UK tax residence should not ignore the enhanced tax breaks offered by the new ISAs.

The warning comes hot on the back of other news that expats paying higher rate tax are missing out on up to £2,500 a year in pension contribution relief because they do not receive the payment automatically. 

HM Revenue & Customs (HMRC) rules allow expats living and working temporarily overseas to take advantage of tax breaks at home – providing they remain UK tax resident.

Financial firm NFU Mutual has warned that one in four investors forget about tax-efficient ISAs when making savings decisions – and that increased cash limits can give them the chance to save even more tax on their investments.

Limit raised to £15,000

Chancellor George Osborne announced the enhanced limits in his Budget 2014.

Since April 6, 2014, savers can put £5,940 into cash ISA and another £5,940 into a stocks and shares ISA.  From July 1, 2014, this limit rises to £15,000

From this date, the whole £15,000 can be saved as cash, stocks and shares or a mix of both.

Savings and investments within the ISA wrapper grow free of capital gains tax and income tax on reinvested dividends or interest.

NFU Mutual reckons more than 12 million savers and investors do not take advantage of the tax-free benefits of an ISA.

Safe from tax

HMRC figures disclose just 47% of savers have an ISA, 27% of people have no savings and 26% are paying unnecessary tax on money or shares that could be held in an ISA.

“Saving cash in an ISA is simple way to safeguard your money from the taxman and the new rules let people safely save even more without paying tax,” said Sean McCann, a chartered financial planner at NFU Mutual.

“Savvy investors are likely to have used up this year’s allowance already and will top up their ISAs when the limit rises. It’s time more people stopped paying tax that they do not have to pay and took advantage of what an ISA can offer instead.”

Investors are also advised to stash their cash in an ISA at the start of the tax year rather than the end, so they can gain an extra year’s tax benefits.

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