Individual Savings Account (ISA) - don't miss the deadline
An Individual Savings Account (ISA) is a tax-efficient investment wrapper in which you can hold a range of investments, including equities, bonds, property shares, multi-asset funds and cash, which gives you control over where your money is invested. It’s important to remember that an ISA is just a way of sheltering your money from tax it’s not an investment in its own right.
You can put money into one Cash ISA and one Stocks & Shares ISA each tax year. The tax year runs from 6th April to 5th April. Currently, you can save up to £20,000 in one type of ISA account or split the ISA allowance across both types. Your ISA won’t close when the tax year finishes. You’ll keep your savings on a tax-efficient basis for as long as you keep the money in your ISA accounts.
Junior ISA Limits
With a Junior ISA, you can invest up to £4,128 in this current tax year, increasing to £4,260 in the 2018/19 tax year. You can switch from a Cash Junior ISA to a Stocks & Shares Junior ISA and back again.
Generate a Tax-Efficient income
When you invest through an ISA, your money is protected from HM Revenue & Customs, so you don’t have to pay personal Income Tax on any interest you receive from your investments. In a Stocks & Shares ISA, interest is generated by bond funds, which are popular with investors because they offer the potential for a regular lower-risk income compared with equities.
This feature of an ISA is particularly useful in retirement, as it means you can hold your money in bond funds and generate a tax-efficient income on top of the payments you receive from your pension. It is also very beneficial if you want to generate long-term capital growth from your funds but prefer to take a cautious approach to investing.
Flexible and Instant Access
Unlike a fixed-term investment vehicle or pension, most Stocks & Shares ISA providers provide you with flexible and instant access to your money, without losing the tax benefits on the rest of your savings held within the wrapper. You can choose to withdraw some or all of your money at your convenience. However, it is worth remembering that once withdrawn, it cannot be returned.
If you would like any assistance or advice about investing in an ISA, or transferring your ISA in the next tax year, please contact Independent Pension Specialists Ltd.
Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.* The value of investments and income from them may go down. You may not get back the original amount invested.* Past performance is not a reliable indicator of future performance.*
*only applies to Stocks & Shares ISAs.