Strategic Finance

ISA management costs to shoot up

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Strategic Finance
Written by Gary Howes   
Tuesday, 22 September 2009

Brewin Dolphin says new ISA rules create complications and add costs for ISA managers.

 

Asset managers Brewin Dolphin have said the new ISA rules have increased management costs for ISA managers.

The company who manage over £17bn worth of assets have also branded the new ISA rules as churlish.

The claims have been made as the amount of money you can put into an ISA each year is set to increase from £7,200 to £10,200.

This is courtesy of measures announced in 2009's Budget. The new annual ISA allowance includes up to £5,100 that can be saved in a cash ISA – up from the current limit of £3,600.

Brewin Dolphin have criticised the government for only allowing those over age 50 (or who will be 50 by 5th April 2010) to have the new allowance this tax year – that is from 6th October 2009.  If you have already subscribed this year you may top it up by £3000 from next Tuesday. 

This may well have been introduced to assuage those upset by the changes to pension tax relief.

However, for all those under 50 they may only invest £7,200 this tax year and wait until 2010/11 to invest £10,200. From 6th April 2010, the new allowances will apply to all investors aged 18 or over.

Charlotte Black, Director of Corporate Affairs at Brewin Dolphin says:

 “This complication adds costs for ISA Managers like us – we will have to verify dates of birth for every application and it seems a churlish move by the Government to exclude the young – but that should not deter the eligible from using their full entitlement this year. 

"ISAs are the most flexible savings vehicle and any income or capital withdrawn from them is tax free; in retirement this could save those on the cusp from paying higher rate tax. So it is wise to build up as big an ISA fund as possible. Brewin Dolphin has already seen a 20% increase in ISA subscriptions so far this year and that is before the increased allowance comes in on Tuesday – reflecting the move out of cash and into equities we have been witnessing this year.”

 

 
 
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