why WISA?

Employees are likely to have different savings priorities depending on their personal circumstances. Whilst a pension is likely to remain as an integral part of longer term savings a more flexible savings choice is now required.

Some employees will have shorter term priorities, for example saving for a home, whilst senior employees may be affected by the restrictions to pension tax relief and so require a savings alternative.

Key considerations when assessing Workplace ISA include:

• The Pension Vs ISA debate
• Benefit for high earners following tax changes
• Linking your share scheme to an ISA
• Increased flexibility for your employees
• Shelter future tax using 'bed & ISA'
• Diversification of existing shareholdings

pension Vs ISA.

high earners.

High earners are seeking alternative savings choices. The restrictions to pension tax relief will make pension contributions less attractive for some. Many employers are responding and implementing Workplace ISA as a tax efficient alternative.

The current £10,680 subscription limit means your employees can invest up to £890 per month to the Workplace ISA, in addition to any pension contributions.

flexibility.

Employers are looking for increased flexibility in the benefits they offer their employees; Workplace ISA is one of the many options available. A long term investment such as pension may not be suitable for all employees; whereas a Workplace ISA can be used as a shorter term savings vehicle, for example saving to purchase a car.

shares schemes.

Our Workplace ISA enables employees to transfer shares from all employee share schemes;

Shares from a save as you earn (SAYE) scheme can be transferred to an ISA within 90 days following the exercise of the share option with the following potential benefits;

• transferring shares up to a value of £10,680 to mitigate capital gains tax
• future capital growth is free of tax
• shares can be diversified where an individual holds a too greater proportion of their wealth in the shares of one company

Shares from a share incentive plan (SIP) can be transferred to an ISA within 90 days of their withdrawal from the plan with the following potential benefits;

• higher rate taxpayers may avoid the additional tax payable on dividends received
• shares can be diversified where an individual holds a too greater proportion of their wealth in the shares of one company

bed & ISA.

By transferring existing shareholdings to an ISA, employees can shelter any future capital growth from tax. Shares are sold, with the cash proceeds being invested in the ISA. The cash is then used to reacquire the shares but this time within the tax free environment of the ISA.

The initial sale of shares may be chargeable to capital gains tax but in many cases the capital gains tax annual exemption, currently £10,600, will be available.

diversification.

A Workplace ISA allows shares to be transferred into a tax efficient environment.

Once within the Workplace ISA, shares can be diversified to ensure that employees do not hold a too greater proportion of their wealth in the shares of one company. The risk for an employee, should they have all their eggs in one basket, is that a fall in the share price could have a significant impact on their longer term financial well being.

Diversification is an important consideration for those participating in share schemes on an on-going basis. Whilst employee share ownership should be encouraged, employees need to be aware of the risk; the Workplace ISA can help employees manage the risk in a tax efficient manner.