What You Need To Know About Your ISA Allowance
The end of the Tax year is fast approaching and we thought it would be a good idea to give you a heads up on everything you need to know about your ISA Allowance.
This tax year you can invest up to £20,000 in ISAs (the tax year runs from 6 April 2017 to 5 April 2018). If you miss the deadline, your allowance will not roll over to the next tax year, and you will have lost that portion of your ISA allowance so seriously keep this in mind when planning your ISA activity.
You can invest the full amount into either a Stocks & Shares ISA or a Cash ISA, or alternatively split your investment between a Stocks & Shares ISA and a Cash ISA, providing you stay within the overall limit.
Even though rates are not what they once were, the earlier you save the more you'll earn. If you've opened one in previous tax years don’t worry, you can open another with whichever provider you choose. And if the rate happens to be poorer on your old ISA you can transfer it to the new one.
Every tax year the ISA allowance lets you build a significant portfolio of assets sheltered from tax. We have some clients who have used their ISA allowance (and before them ISAs and PEPs) every year who now have substantial portfolios.
There are actually 2 types of ISA: a cash ISA - where you don’t pay tax on saving accounts interest, and a stocks and shares ISA - where you don’t pay tax on any income or capital gains you’ve made on your investments. The tax advantages will depend on your individual tax position though, so always take advice.
If you complete a tax return, you don’t need to declare any ISA Interests or profit on it.
Here’s what cash ISA’s can include:
- savings in bank and building society accounts
- some National Savings and Investments products
Stocks and shares ISA's can include:
- shares in companies
- unit trusts and investment funds
- corporate bonds
- government bonds
There are also Life Insurance ISA. You can buy a life insurance ISA which will pay out if you die. Your family or dependants won’t need to pay any tax when the policy pays out.
Other life insurance policies which pay if you become ill or can’t work can’t be part of an ISA.
And don’t forget the ISA allowance applies to each individual so if you’re a married couple make sure to use your ISA allowance before the 5th April. If you need any help on deciding the right ISA for you, email me on firstname.lastname@example.org