Saving options for 2017
A new infographic has been jointly published by HM Treasury and HM Revenue & Customs. The one page document lists information about various ways to save in 2017 including ISAs and other savings options.
The following are some of the most popular tax efficient savings options:
ISA accounts are free from Income Tax and Capital Gains Tax. Eligible holdings include cash, national savings products, life insurance products, stocks and shares. Account holders may make withdrawals at any time without the loss of tax relief. The ISA subscription limit for the current 2015-16 tax year is £15,240. From April 2017 the limit will increase to £20,000.
Junior ISAs were introduced to encourage children to save money and provide an alternative to the Child Trust Fund (CTF) which is no longer available to new applicants. The returns from Junior ISAs and existing CTFs are also tax-free and are usually locked in until the child reaches 18. The annual subscription limit for Junior ISAs and Child Trust Funds will increase to £4,128 from April 2017 (currently £4,080).
The Help to Buy: ISA scheme awards savers a bonus of 25% on monthly savings of up to £200 on savings towards their first home. The bonus translates to an extra £50 added to every £200 saved up to a maximum governmental contribution of £3,000 on £12,000 worth of savings.
The new Lifetime ISA is due to launch in April 2017 and will help those aged between 18 and 40 to save for a new home or for their retirement. The new scheme will see the government provide a bonus of 25% on yearly savings of up to £4,000 until the saver’s 50th birthday. This could mean an extra £1,000 for every £4,000 saved annually from the age of 18 to 50.
Finally, the ever present Premium bonds now benefit from a £50,000 limit. Premium bonds do not pay interest but offer tax-free returns in the form of a monthly prize draw. The minimum investment is £100 per person. A nominal interest rate of 1.25% is used to calculate the prize fund but there are obviously some Premium Bond holders that do better than others and returns are not guaranteed.