The latest insights from Weatherbys Bank

With the imminent reduction in the tax free dividend allowance, savers are still giving thousands to the tax man by stockpiling cash in ISAs 

Despite the Government increasing the taxation on dividends by reducing the tax free dividend allowance from £5,000 to £2,000 from 6th April, more than £250 billion is still held in cash ISAs according to HMRC statistics.
Graeme Stenson, head of Financial Planning at Weatherbys Private Bank said:
“For clients with long term savings objectives and the necessary level of understanding, moving from simply holding cash in an ISA to a more diversified portfolio, that includes shares and bonds, will not only increase expected returns but also save significant amounts of tax.
“Failing to use annual ISA allowances costs UK taxpayers a lot each year in unnecessary income and capital gains tax.  For example, a 50 year old using his or her £20k annual allowance in this way could expect to return as much as an extra £102,000 by the age of 70.
“Over a lifetime, it should be possible to save up to £1m in tax free ISAs, making ISAs a very important part of the savings and investments landscapes.  On a £1m pot, this could mean paying at least £10,000 less in tax every year.”

Published Monday 26th March, 2018

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