Tick, tock – time to use ISA allowance

Some investments are all about timing, and making the most of an annual ISA allowance is essential for you to enjoy maximum tax-free savings. Check your ISA investments before the tick, tock of the tax year clock counts down…

Some people still find Individual Savings Accounts (ISAs) confusing. They shouldn’t. They are easy-to-open, tax-free accounts for savings or investments. You choose which ISA suits your lifestyle based on ability to save and attitude to risk.

Currently, individuals can put up to £20,000 into an ISA account in any one year (April to April). This allowance will be the same during 2019-20 tax year, so you can plan ahead what you can save and earn.

Importantly, although that savings window opens up every April, you cannot carry over any unused allowance into the next tax year.

If you already have one or more ISAs, now is the time to check how much you have added during the current tax year. The clock is running down if you intend to top up to the full amount to enjoy maximum benefits.

If you have used up £15,000 of this year’s ISA allowance, you are entitled to put up to £5,000 more into your ISA account(s) right up to the tax year deadline at midnight on April 5th.

Spare cash to invest?

So here’s the question: have you got any spare cash that you are unlikely to need before April 5th? If the answer is YES, then the most efficient way to save and grow that cash is to put it into an ISA.

Leave your money in a standard bank account and you’ll miss out. That’s daft. Even if you have to move your funds next year, enjoying several months of tax-free interest should not be missed.

Although the maximum you can invest each year is £20,000, you can mix and match how you invest in different types of ISAs.

You could decide to invest, say, £10,000 in a stocks and shares ISA, £5,000 in a cash product, and £5,000 in an innovative finance ISA.

Not all investments are created equal. By that we mean the annual allowance is sometimes different. Confused? Don’t be. All it means is that certain ISA products have different savings ceilings.

For example: a Lifetime ISA can be very rewarding, but you can only invest up to £4,000 each year. This means you would have £16,000 of allowance remaining to save into other types of ISA accounts.

Get independent advice about ISAs

As always, it’s important to acknowledge that the value of investments can go down as well as up – especially when you are considering stocks and shares ISAs.

There is no right or wrong ISA, but your attitude to risk is an important consideration.

Logic Wealth Planning offers friendly, independent financial advice. ISAs are just one of many investments that we can help with as part of an overall wealth plan.

First, we’d always want to sit down and chat. We listen. Only then can be make informed decisions and offer the best financial route forward.

Time to talk about ISAs? Give us a call on 0808 1234 321 (freephone) or email info@logic-wp.com and we’ll arrange a convenient time to discuss your options.