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The new tax year begins today, 6th April 2020, which also marks the day your personal Individual Saving Account (ISA) allowance resets.

We know that the investment world can be a confusing place for potential investors, particularly with the current turbulence in the markets, so we’re answering the most common questions about ISAs for those people who are looking to begin or continue investing to achieve their medium to long-term financial goals,  

If you want to learn more about how the recent market changes could impact decisions around investing, head to our Q&A blog here

What is my 2020/21 ISA allowance?

Your personal ISA allowance for 2020/21 is £20,000, which has remained unchanged from the previous year.

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What types of ISA are available to me?

There are several types of ISAs available to adults. However, the four most common types of ISAs are;

• Cash ISA,
• Stocks & Shares ISA
• Innovative Finance ISA
• Lifetime ISA (LISA)

All these ISAs will count towards your yearly personal allowance, so it’s important to know how allowances work.  

Parents can also contribute to a Junior ISA (JISA) for their children, but this doesn’t affect their own personal ISA allowance.

Is my ISA allowance split across all types of ISAs? Or is it £20,000 per ISA?

Your ISA allowance can be split across the other different types of ISAs and the total amount that you can contribute into your ISAs collectively is £20,000.

To explain this a little better, read our examples below.  

Method 1 – Go all in
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Use up to the full £20,000 ISA allowance in one type of ISA - This can be within a Cash ISA, Stocks & Shares ISA or an Innovative Finance ISA. You cannot invest your full allowance towards a LISA as they have a maximum allowance of £4,000 per tax year due to the 25% government bonus you receive on contributions. ‍

Method 2 - Mix and match your ISAs
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Split your allowance between different types of ISAs. You can invest a maximum of £4,000 towards a LISA and the remaining £16,000 can be split between the other types of ISAs. For example, that could look like - £10,000 in a Stock & Shares ISA, £6,000 in a Cash ISA and £4,000 in a LISA.

Here at OpenMoney, we know that the majority of people don’t have £20,000 to invest each year! So, you can invest in a Stocks & Shares ISA with us from as little as £1! You can find out more about our investments here.

Can I contribute more than one ISA of the same type within the same tax year?

Unfortunately, you can’t. If you invest in a cash ISA in the 2020/2021 tax year, you will then not be able to contribute into another cash ISA in the same tax year. The same rule applies for other types of ISAs also.

You can contribute to several different types of ISAs in the same year. ‍

What are the tax benefits of a Stocks & Shares ISA?

When investing into a Stocks & Shares ISA there are several tax benefits that come with it:

• Any interest or returns (sometimes referred to as ‘capital gains’) you make on an ISA are always tax free
  
• The money in your ISA won’t be subject to any tax when it’s withdrawn
  

Can I transfer my ISA to another provider?  

Yes, although there are some restrictions when it comes to transferring ISAs. If you’ve already contributed towards an ISA during the current tax year and you wanted to transfer to a different provider, you must transfer all the contributions made in that current tax year.

For the money you invested in previous tax years, you can make a choice on whether you wish to transfer all or part of these savings.

To switch your providers, contact the ISA provider you want to move to and fill out an ISA transfer form.  

Remember, some providers may charge you a fee when transferring.  

Here at OpenMoney we offer a free transfer review and we will only tell you to transfer to us if it’s in your best interests - then we’ll manage the whole process for you.

When does your allowance restart?

An ISA allowance resets on a yearly basis at the start of a new tax year, which is always the 6th April. For the 2021/22 tax year the maximum ISA allowance will remain at £20,000.

If I don’t use my allowance, can I carry it forward to next year?

When your ISA allowance resets on the 6th April, you can’t carry over any unused allowance from the previous tax year, so it’s important to make the most out of your annual allowance before the deadline.  

That’s our round-up of the most asked ISA questions for the 2020/21 tax year. If you want to read more about ISAs, you can check out our ISAs explained blog series!  

The coronavirus is impacting all of our lives, whether that is physically, mentally or financially. Things are changing every single day, and that is the same with mortgages. Whether it is the Bank of England reducing the base rate to 0.1%, lenders announcing mortgage payment holidays or lenders announcing they won’t lend anymore money. There are changes every single day.

Whilst there are some great things coming out of this from mortgage lenders, there are also several pitfalls which we'll explore below.

Payment holidays

Let’s start with the big news: lenders allowing you to take payment holidays. Almost all mortgage lenders have risen to the challenge. They have agreed to allow you to take up to three months off from paying your mortgage and have also said this may be extended depending upon external circumstances. This is a great step by lenders, but there are a couple of things to consider.

·       Do you need it? Whilst we appreciate this is a great boost to thousands of people, only apply for this Mortgage holiday if you need it. Don’t take it for the sake of having three months off your payments. Despite your payments being paused, you will continue to be charged interest. This interest is then added to your mortgage meaning you will pay more over the term of your mortgage. If you do need it, please speak to your lender.

·       How will it affect your credit file? Lenders have said they will try to stop it impacting your credit file, but that doesn’t mean it won’t. When you come to re-mortgage in two years’ time and there are three missed mortgage payments on your file, you may find that it could stop you moving lender, moving to a new house or getting a better rate.

If you are struggling, we wholeheartedly recommend speaking to your lender and seeing if you can have a break from your mortgage payments. Please consider all the risks of this, as your payments are going to increase after the holiday, and there are a lot of unknowns.

There are also other alternatives to having a break from your payments. Why not consider extending your term? The impact of this virus is likely to be far longer than three months, which could allow you to make this more affordable for the future. Why not convert to interest only temporarily? This will mean the interest isn’t building up on your mortgage. Or even paying some of the mortgage.

Whatever you are considering doing, please speak to your lender first. Don’t stop paying your mortgage!  

Interest rates

Don’t worry, it’s not all doom and gloom, there are some positives too. We are seeing the Bank of England base rate at an all-time low and as a result of this, mortgage rates are low, with some below 1%. If you are currently on the Standard Variable Rate, or on a tracker deal it might be worth considering re-mortgaging. We understand now might not be a great time to review your finances with everything going on, but it is worth getting some impartial advice to make sure you are on the best deal for your circumstances.

Purchasing a home

I have had a lot of people get in touch with me asking whether they should continue with their House purchase. Here at OpenMoney, we know how much goes into buying a home - the planning, the finances and most importantly the emotional impact on you. With these factors in mind, the answer is different for everybody.

The government is urging people not to move house during the outbreak to avoid breaking social distancing protocol, but this does not mean you should stop buying your dream home. It means you need to consider your options, such as delaying the purchase.

When deciding to buy a home, you will have put months of planning in place, and spoken to mortgage advisers, estate agents, solicitors, and family about the process. You will have saved for months and months to put your deposit down. You shouldn’t therefore stop buying your house without taking some time to thoroughly consider key factors such as the below:  

·       What does your financial situation look like? A lot of businesses are under enormous financial pressure with thousands at risk of losing their jobs, what is the chance of you losing yours? Are you self-employed, will your income be affected by everything going on? Whilst the government is doing its best, their help won’t last forever. Once that stops will you be able to afford those monthly mortgage payments for the next 40 years?

·       How could you be affected if you already have a mortgage offer? If you have lost your job and you have a mortgage offer, you must tell your mortgage lender. It is vital you do so. If they find out after you purchase the property, they can repossess it, and you could find yourself in a lot of trouble. If you have any potential issues, please speak to your mortgage provider or adviser.  

·       Will your options be limited? Some providers have stopped lending to help people purchase homes, and others have reduced what they offer. This may mean your choice is limited. However, it doesn’t mean there aren’t still thousands of mortgage products out there, it simply highlights the huge benefit of getting independent advice.  

The reasons for you buying a home aren’t going to disappear overnight. Whether it is buying your first home, your family needs more space, or you want to move to a nicer area. These reasons will still be there in two months or two years’ time, so don’t give up your dream of a new home. Take time to assess your situation and make an informed decision.  

One thing that this has reinforced for me, is the need for our country to have the right insurance and protection. Everyone in the office is sick of me saying this, but as a country we do not have enough protection in place if the worst is to happen. If you do one thing once we have recovered from this, and we will, please speak to someone and get the right insurance. Naturally, we don’t like talking about people passing away, or not being able to work for months at a time due to ill health, but it does happen and you need to have insurance in place to protect both you and your family.

I hope this has shown you a few of the options available to you, and has also given you few things to consider. Most importantly speak to your lender if you are in trouble, they are on your side and are there to help you.

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Now that we have found ourselves confined to the comforts of our own homes for the next few weeks, it’s a normal reaction to try and sooth one’s soul through the medium of online shopping. No judgement here, we’re all in this together (but did I really need that cactus?). Whilst we’re likely to save a bit of money by not going out, buying coffee, ordering takeaway etc, it wouldn’t be realistic to advise you to not spend a penny, we can offer a nudge in the direction of mindful spending. Below is a roundup of the apps, services and activities that are perking us up at the moment – most of them are free, but any costs involved, we believe contribute to feeling a bit brighter and we have detailed all information.

Top 5 free trials

Now is the perfect time to ‘try before you buy’, and these are our favourite free trials at the moment. Top tip: set a reminder on your phone to cancel your subscription, as most companies will sign you up and charge you automatically.

1.    Amazon Prime[1]

Terms: 30 days. £7.99p/m or £79p/a

This is the perfect option for those who has already exhausted all that Netflix has to offer. This streaming service has a whole host of original TV series and films available that you may not be able to find elsewhere. Here are a few TV recommendations from the team to get you started:

The Boys
Outlander
The Marvelous Mrs Maisel
This is Us
Vikings

2.    Spotify Premium[2]

Terms: 30 days free (for new Spotify members only) and then £9.99p/m.

To quote Plato, music gives a soul to the universe, wings to the mind, flight to the imagination, and life to everything. If ever there was a time that our minds needed wings it’s now! Your premium membership will give you endless hours of uninterrupted tunes to help you concentrate, chill you out or cheer you up.

3.    Audible[3]

Terms: 30 days free plus one free audio book (If you're an Amazon Prime member, they'll bump this up to two books). Plans start at £7.99 p/m.

If a busy social calendar has gotten in the way of reading, now’s a good time to get stuck in. Audio books are a great step back into the world of books and they’re great company for your walk of the day! You get one free audio book with this trial, so choose wisely. May we suggest one of the Harry Potter books? Even if you’ve read them several times over, there’s something comforting about Stephen Fry reading these well-loved tales in such tricky times!

4.    Duolingo Plus[4]

Terms: 7 days free. £80 p/a for continued premium use

If you’retaking time to learn a new skill, maybe a new language is the way to go. The free version of Duolingo is pretty good, but you might as well enjoy seven days of no ads and unlimited attempts at words and phrases as you progress.  

5.    My Heritage[5]

Terms: 14 days free. Packages starting at £79 p/a (£59 for the first year).

A good bit of research to get your teeth into could be just the thing to keep you busy and interested over the coming weeks. Maybe you’ve binge watched all episodes of Who do you think you are and want to know how find out if you’re distantly related to royalty. This 14 day trial can send you down a rabbit hole of history and is bound to bring up new things to chat about!

Top 5 ‘feel good’ services

No one really likes change, but we’re all having to adapt to a new way of living, and pretty quickly. Below are a few things that we’re finding useful to get us through mentally as well as physically. 

1.    Hello Fresh[6]

Whilst the tendency might be to pop a pizza in the oven for comfort, spending (a lot) more time at home could offer the opportunity to experiment in the kitchen. Recipe boxes such as Hello Fresh (meals starting at around £3.50 pp) can be a good way of trying new things and being relatively healthy at the same time. When some form of normality does resume, you will have learned new recipes and be able to recreate them at any time.

2.    Free full body workouts from Barry’s Bootcamp[7]

Now that gyms are closed, the normal treadmill and floor schedule of a Barry’s class has been stripped back and adapted to 30 minute hardcore sessions that can be done from the comfort of your own home. These are broadcast on the Barry’s Instagram page and the schedule is released daily on their Instagram stories.

3.    Free yoga and Barre with FLY LDN[8]

To bring a spot of zen into your lives, FLY LDN are holding 45 minute yoga and barre sessions live on their Instagram page. Unlike many others, they are also posting each session on their Youtube[9]channel so that you needn’t worry about missing any part of the live broadcast.

4.    Calm app[10]

With stress and anxiety being at an all time high, having a toolkit to practice mindfulness and set yourself up for a restful night’s sleep is a great thing to have. This app offers everything from breathing exercises to bedtime stories. It’s free to download with an optional subscription so you can see how you get on with the basic package to begin with.

5.    Let’s Day Out App[11]

This popular app that focuses on bringing people together through experiences, is thoughtfully re-branding to ‘Let’s Day In’. They will be hosting lots of virtual group activities from cooking demonstrations to art classes. All the sessions are free, but there is the option to donate £1 to the World Health Organisation’s COVID-19 Solidarity Response Fund.

5 things to jazz up home schooling

For many parents, the thought of having to home school their children is daunting and stressful. We’ve listed a few things below to bring some educational fun to your new school days.

1.    Joe Wicks PE lessons[12]

Joe Wicks aka The Body Coach, is hosting daily 30-minute PE sessions live on his Youtube channel at 9am. They’re great for waking everyone up, engaging the brain and getting into some form of routine when everything is so out of sorts. Although aimed at children, it’s a great way for the whole family to spend some time together being active, and if we’re honest it’s left some of us adults out of puff too.

2.    The Maths Factor[13]

Carol Voderman has announced that she is removing the paywall on her tutorial website for children, The Maths Factor. This is aimed at children of primary school age and will be freely available for as long as children are having to stay away from schools.

3.    Printable Pages

Many illustrators such as Matt Richards[14] and Jacqueline Coley[15] have started producing artwork that parents can print off for their children to colour in. It’s the perfect down time activity to break up a curriculum based timetable.

4.    David Walliams Audio Stories[16]

Just as audio books are great for adults, children can really benefit too. A huge part of school life is shared reading and being read to. David Walliams, author of Gangster Granny and Mr Stink (to name but a few) has announced that he will be releasing an audio story for school children every day at 11am for the next 30 days for free. These can be found on his website, under ‘Elevenses’.

5.    Family Baking

Studying at home needn’t purely revolve around times tables and literacy, there’s a lot to be gained from fun activities at home such as baking. Getting the family involved teaches measurements, elements of time keeping, the science behind baking, the importance of a clean kitchen…and patience from all involved! Little Cooks Co’s Instagram[17] has many recipes that little hands can get involved with, but there’s no reason they can’t get stuck in with your day to day cooking routine!

[1] Amazon

[2] Spotify

[3] Audible

[4] Duolingo

[5] My Heritage

[6] Hello Fresh

[7] Barry’s Bootcamp Instagram

[8] FLY LDN Instagram

[9] FLY LDN Youtube

[10] Calm

[11] Let’s Day Out

[12] PE With Joe

[13] The Maths Factor

[14] Matt Richards

[15] Jacqueline Coley

[16] David Walliams Audio Stories

[17] Little Cooks Co Instagram

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The Coronavirus has been eye opening in all aspects of our lives and has made many of us take a close look out our personal situations including how we stand financially when the going gets tough. Our latest research with YouGov has highlighted the nation's precarious financial position as we entered the uncharted territory that is this global pandemic.

We found that a fifth (21%) of British adults have no immediately accessible savings; and just under a fifth (18%) only have enough to cover essential outgoings, like mortgage and rent payments, utility bills and food, for two months or less if they had no income coming in.  

The research, conducted earlier this month among 2000 British adults, shows that a huge number of households were already struggling financially and may need even more help to survive the additional economic difficulties stemming from COVID-19. Our other key findings were:

• Over the last two years, of those that have experienced financial difficulties, 12% have been behind on paying essential bills and 10% have missed a debt or loan repayment.
• In the last twelve months, over two fifths (44%) have run out of money before their next pay day at least once and over a third (34%) have relied on short-term credit to pay for something.  
• Three fifths (60%) of households have some form of debt. Credit card (32%) and mortgage debt (29%) are most common but many also have unsecured loans (20%), authorised overdrafts (14%) and car loans (9%)2.
• Only half (51%) of people are keeping up with their financial commitments without any difficulties.
• Almost a third (30%) are rarely or never able to put aside any of their income into savings.

Our research makes it clear that many households were already in a fragile financial position and the additional economic uncertainty created by Covid-19 may push people into further difficulties. The ongoing response by the Government and banks to help vulnerable customers with mortgage payment holidays and extra protection for credit card users is to be welcomed, but more may need to be done to support those in financial distress as the crisis continues and as we come out the other side.  

If you are struggling to pay essential bills, or with making debt repayments, contact your provider as soon as possible to discuss delaying or reducing payments. Prioritise paying off debt with the highest interest rates first and if you do need to take on more short-term credit opt for the form with the lowest paying interest. Look at your outgoings to see if there’s any services you can stop or reduce given the current circumstances. As always, if you are concerned, we’d recommend contacting the Money Advice Service for guidance.

These findings were from OpenMoney’s annual research into the UK financial advice gap and will form part of a larger report later this year. The 2019 report, The UK Advice Gap: Are consumer needs for advice and guidance being met? can be downloaded here.

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What should I do with my Pension? Is now a good time to invest? Should I sell my investments or buy more? 

These are just some of the questions we’ve been helping our customers to answer. There is so much uncertainty at the moment, and not just for your money. We asked Hayley Millhouse, our Head of Advisory Services here at OpenMoney, to shed some light on our most frequently asked questions.  

Is now a good time to invest?  

With the markets in a dip, you might hear that it’s a good time to invest new money. While investing in a market downturn can offer the potential to make returns on your money when the market does pick back up, we don’t advise our customers to try and time the markets in this way.  

This is particularly important in the current circumstances, when the outcome and timescales for economic recovery are so unpredictable. No one can say how long the markets will take to recover. If you are considering investing, thinking about your goals is a good starting point.  Are you considering investing to help you achieve your medium to long-term goals, such as retirement, or because of what you’ve seen or heard in the press? 

Investing money is a way to help you achieve your long-term financial goals and shouldn’t be thought of as a quick way to try and make some extra money and capitalise on what’s going on in the markets. 

Here are three things we advise our customers to consider first before making a decision to invest: 

• Are your debts manageable? We only recommend investing if you’re paying less than 15% of your salary each month to manage unsecured debts. 
• Do you have a cash buffer to cover you in emergencies? We recommend you have at least 3 months outgoings to keep in accessible cash savings for an emergency. This is more important than ever, as many people’s incomes might be uncertain over the next few months.  
• Are you happy to leave your money invested for at least 5 years? We only recommend investing if you’re happy to leave your money invested for at least 5 years. This helps you to ride out any short-term market fluctuations. This is particularly important now, as the next few years for the market are so hard to predict. 

If you want to know whether investing is right for you, you can take our financial health check to find out and we’ll advise you on what’s best for you. 

Should I sell my current investments? 

We know that changes in the market can be unsettling at any time and particularly now, with the wider impact Coronavirus is having on our day-to-day lives. However, it’s important to remember that volatility is all part of the investing journey. It’s really important not to panic and make decisions led by emotion - although we know that’s easier said than done.  

We all have an emotional attachments to our hard-earned money, and it can be worrying to see the value of our investments fall, but investing is for the medium to long-term, and we tell our investors to stay focused on their long-term goals throughout these periods of uncertainty.  

If you have access to a financial adviser, we’d recommended speaking to them about your concerns before you sell down any investments you hold.  

If you’re an OpenMoney customer, you can book an appointment with one of our advisers at no extra cost, through your OpenMoney online portal. 

I am close to retiring – should I be worried about my Pension? 

If you’re close to retiring, it could be a particularly scary time for your Pension. If you have a plan for retirement it’s a good time to review it – we always recommend reviewing your retirement plan on an annual basis, or when there have been any specific changes for your circumstances.  

If turbulence in the markets have impacted your Pension and retirement plan, you might need to look at your options on how and when you take your retirement income. For example, is it necessary to take your tax-free cash right now? Do you have other savings you can take income from? Is there an opportunity to delay or phase retirement or take a part-time job for extra income?  All of these options could give the markets opportunity and time to recover. 

If you don’t have a plan yet, there is help out there for you: 

• The government’s Pension Advisory Services offer a range of guidance and planning tools and they’re free to use 
• Pension Wise offer free and impartial government guidance for over 50s on retirement options 
• You can also speak to a financial adviser, although there may be additional cost associated with this 
• We’ve partnered with GUIIDE [1], who offer a free tool to help you build a plan for your retirement and save money too 

If you’re an investor with OpenMoney and you have any questions or just want to chat to our support or advice team for some support and reassurance, please reach out to us. Our team are ready to help: 

• Email hello@open-money.co.uk 
• Reach out through our webchat between 9am – 8pm on weekdays  
• Call us on 0101 204 3200 
• Book an appointment with one of our qualified financial advisers through your OpenMoney portal  

We’re all in this for the long term and we’ll get through these challenging times together! 

[1] Guiide