The following case studies clarify how much can be paid into an ISA under the current rules for the tax year 2017/18.
Case study one
John is 30 and single. He has £13,000 invested in a cash ISA with his bank. He has contributed £3,000 to it in the 2017/18 tax year. He has approached you about making further ISA contributions.
Could he invest in an ISA with Old Mutual Wealth? If so, how much can he contribute?
John could take out an ISA with Old Mutual Wealth as it is possible to contribute to one cash ISA and one stocks and shares ISA in the same tax year.
The total ISA subscription allowance for the 2017/18 tax year is £20,000. John has already contributed £3,000 so he can contribute a further £17,000. It would also be possible to transfer his cash ISA to Old Mutual Wealth. This money could be held in Cash Deposit with us where it will earn interest. Alternatively, John could invest in the assets available to him within the ISA.
Case study two
Mrs Brown’s husband died in January this year. Both Mr and Mrs Brown held ISAs with Old Mutual Wealth. Mr Brown left everything in his will to his wife. The value of his ISA was £112,500 as at the date of death and is currently £114,950. Mrs Brown is looking to maximise her subscriptions for the current tax year. How much can she invest in her ISA for 2017/18 tax year?
Mrs Brown can invest £20,000 plus the entire value of her late husband’s ISA as at the date of his death. As both ISAs are with Old Mutual Wealth, the units in Mr Brown’s ISA as at the date we are notified of the death can simply be registered in the name of Mrs Brown. If the value of the transferred units is greater than £112,500 (the value as at the date of death) at the time of the transfer, the excess will be paid to Mrs Brown. There may be Capital Gains Tax implications for the excess paid to Mrs Brown.
Case study three
Mr Black wants to utilise his annual ISA allowance for the current tax year (2017/2018). He holds collectives and has come to you to understand what he could do.
Mr Black hasn’t used his annual Capital Gains Tax exemption of £11,300.
Mr Black can dispose to realise gains up to the annual exempt amount of £11,300, from his collectives
- the value and what contributions he has made to ISAs in the current tax year; and
- whether he needs any of the capital
He could invest some or all of the proceeds into an Old Mutual Wealth ISA. He can even invest in the same funds.
We have a Capital Gains Tax tool to help advisers calculate the theoretical gains that would be made on disposals from our Platform Collective Investment Account, but we are unable to support calculations for competitor’s collectives so how these calculations will be supported must be considered.