Isas have become so complicated it requires an adviser to help cut through the noise, an investment specialist has warned.
Rebecca O'Keeffe, head of investment for interactive investor, said: "One of the main attractions of Isas used to be their simplicity, but the range of options has now made it much more complex."
She gave as an example the Lifetime Isa, which was brought in last year to help younger people save either for a first home or for a pension (at age 60).
However, she said there was "small print" that needed careful scrutiny before people took out a Lifetime Isa.
She said: "The government bonus makes the Lifetime Isa look highly attractive, irrespective of whether it is for buying a house or 60-plus retirement, but the fact the 25 per cent penalty is greater than the bonus means investors need to be aware of the small print."
According to Ms O'Keeffe, establishing the "purpose of what a client wants to do with their Isa saving" would help advisers "cut through the noise".
I severely doubt the majority of savers are not aware they can now repay the money they withdraw from their Isa in that same tax year.Tim MorrisHer comments echoed those of Tim Morris, IFA with Russell & Co.
"There are too many Isas", he said, and various rule changes - such as the flexibility to take money from normal Isas and repay within the same tax year - that have not been communicated as clearly as they could be.
Mr Morris said: "As with pensions, they have become increasingly complex. Based on my experience of dealing with knowledgeable investors, I severely doubt the majority of savers are not aware they can now repay the money they withdraw from their Isa in that same tax year."
Ms O'Keeffe also encouraged advisers to alert clients to the idea of investing earlier in the tax year and make the most of investment growth.
She said: "Alerting people to the idea you do not necessarily need new money to invest in an Isa is one way to encourage more people to act early.
"Bed & Isa options [whereby you can sell existing investments up to the value you want to put in an Isa, and then reinvest within the tax wrapper] are a great way to wrap existing investments in a tax-efficient blanket.
"With the main advantage of an Isa being the ability to create a non-declarable income when your clients need it, the more of your clients' investments that can be wrapped, the better."
Their comments came as FTAdviser published a guide to getting tax planning done early, which qualifies for approximately 60 minutes' worth of CPD.
simoney.kyriakou@ft.com
