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One of the side effects of the new ISA provisions is that if we pay clients an income from their ISA (which we do for many retired clients) then the money withdrawn becomes available to re-invest into the ISA within the tax year.

So for many clients the natural income could be several thousand pounds within a tax year.  This means that added to our tax year end work will now be a consideration of replacing that cash into the ISA from taxed funds.

The issue is best explained by example:

Mrs Miggins has an ISA fund of  £350,000
We take natural income of 2.75%
Month Income Paid To Client Maximum ISA Allowance
April  £800  £16,040
May  £800  £16,840
June  £800  £17,640
July  £800  £18,440
August  £800  £19,240
September  £800  £20,040
October  £800  £20,840
November  £800  £21,640
December  £800  £22,440
January  £800  £23,240
February  £800  £24,040
March  £800  £24,840


So if we wait until March 2017 to use Mrs Miggin’s ISA allowance then we can pay a total of £24,840 on her behalf.  If we make her contribution early then we need to keep a record of her income to maximise tax free benefits within the tax year.

These changes (combined with the transferrable allowance when a spouse dies) tell us two things:

  • P  Clients should be able to shelter a huge amount into tax free ISA savings vehicles.
  • P  To manage client affairs professionally you have to use an administrative platform and a specialist firm of Chartered Financial Advisers.

If you would like further details of how Swallow Financial Planning manage the affairs of clients professionally to maximise their returns and to minimise their tax, then get in touch.


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