According to industry research, the ISA rush has started - but only for cash based ISAs. The research showed that 41% of people surveyed only intended to take up their cash ISA allowance this year. 24% said they were not likely to buy any kind of ISA this year.
The research also revealed that many people were moving away from stocks and shares ISAs because of the tax credit removal.
Our View
We believe that everyone who pays tax and has money on deposit should hold a mini Cash ISA. The tax benefits speak for themselves. However, moving away from stocks and shares ISAs because of the tax credit removal should not be considered as a reason not to invest.
Currently, holding an ISA benefits you on the income and capital gains tax front. The 10% tax credit reclaim only comes from UK dividends. The only people affected are those that invest in funds that receive UK dividends. It does not affect other ISAs.