Workplace ISA has to work for employees, employers, advisers and providers if it is to take off.
The other benefits schemes an employer offers can also influence what staff want is from an ISA.
For example, ISAs can be used to mitigate tax on employee share plans if staff transfer in shares
after a scheme matures.
Jonathan Watts-Lay, director of
WEALTH at work, says: "The real advantage is on sharesave schemes where staff can
transfer them into the Isa and mitigate capital gains tax on any transfer up to the limit of the
Isa value. Those shares can grow tax free once they are in the Isa wrapper. Once shares have been
transferred into the Isa, the employee can then diversify and buy funds or other stock."
"The problem is employees who save £100 a month into their Isa will save £1,200 [a year], but
the annual limit is £10,200 so during that year if they get a bonus or have some extra money and
want to put it into their Isa, a lot of benefits and payroll departments do not like that,"
explains
Watts-Lay. "It is really important online platforms allow people to make one-off
payments, which can be a one-off direct debit or a direct transfer from a bank account, because
otherwise people have to get another Isa if they want to use more of their annual limit."
The range of funds on offer and fund governance is also a way for providers to distinguish
themselves from one another. "One of the things we see quite a lot, which we think is really
missing the point, is a lot of providers saying they can put 2,000 funds on the Isa platform,"
explains
Watts-Lay. "That is all very good and probably says something about their
functionality, but most employees in this country end up in default funds in pensions because they
cannot decide between 15 funds in a pension, so how are they going to decide between 2,000 funds?
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