With just over 8 weeks to go, we are seeing an increasing rush by Clients who are starting to think about adding to their tax-free savings accounts, known as Individual Savings Accounts (ISAs), before the end of the Tax Year, 5th April 2020.
The countdown to the deadline is on! It takes around a week to top up an existing ISA Savings Account, but up to 4 weeks to set up a new one from an Initial Meeting with us. Those Clients that are also invested with True Potential and use their personal Client Website, can utilise their unique Impulse Save function to top up their existing ISA at the touch of a button!
It takes 30 seconds! So make sure you maximise your tax-free allowances today!
If savers miss the deadline, they lose their unused allowance for the current Tax Year, with the £20,000 allowance for the 2019/20 Tax Year disappearing as the clocks chime midnight on 5th April 2020.
What is your ISA allowance?
An ISA Allowance is an annual Tax Allowance available to British Taxpayers, which enables them to make savings into Cash and Investment ISAs without having a Tax Liability on any savings or withdrawals.
The maximum amount that could be saved during the current 2019/20 Tax Year Is a very generous £20,000. Many people assume there is not a pressing need to use the allowance, as they can always use next years instead. But if you don’t use it, you lose it! The allowance does not carry over!
How to make the most of your ISA allowance
You are allowed to save up to £20,000 into a Cash ISA or a Stocks and Shares ISA. Alternatively, you can choose to split between the two types of ISAs. But you cannot exceed the £20,000 allowance. If you do, there would be an automatic tax charge.
Cash ISAs are simple savings accounts which do not Tax on the interest and offer a low-risk return on cash.
The Stock Market offers higher potential rewards than a Cash ISA, however, these investments come with a higher level of risk.
First-time buyers can save for a deposit in a Help to Buy ISA or young people can save for their first home and retirement using the Lifetime ISA. However, this scheme was closed to new account holders from 29th November 2019. Those who opened an account prior to this deadline can continue to save up to £200 per month until November 2029.
Anyone aged over 16 can open a Cash ISA, while 18 and over is the minimum age requirement to open a Stocks and Shares ISA. There are even Junior ISAs for children!
The benefit of placing funds in an ISA through your existing portfolio is that they will be managed under your existing agreement, which means that when you come to access the funds in the future they can be withdrawn tax-free.
If you have a Pension you also have a Pension Allowance this year of £40,000 or your net annual earnings (whichever is the lower), providing you haven’t accessed any of your taxable benefits. This allowance doesn’t have to be used this year and can be carried forward three tax years, providing you are a member of a Pension Scheme throughout. It is, however, good practice to use this allowance if it is relevant for you.
As you can see, there are many ways in which you may be able to maximise your tax-free savings allowances. However, not all may be possible for you and some may not be advisable for your financial situation. Our team of financial advisers are always happy to discuss the best plan of action for you and your family so please just get in touch.
Redwood Financial is one of the south’s leading Investments, Pensions,Wills, Trusts & Estate Planning providers and we are dedicated to helping families to grow, protect and enjoy their wealth. With our unrivalled knowledge of Estate Planning, Lasting Powers of Attorney, Probate, Pensions, Savings & Investments, we can advise on any situation. Come along to one of our FREE Public Seminars on Wills, Trusts & Estate Planning. Book online at Book Me A Place!: call us on 01489877 547 or Email info@redwoodfinancial.co.uk.
