With the tax year beginning to loom on the horizon, we have reached the part of the year when ISAs will be advertised everywhere. So, when it comes to ISAs here are few key points to remember:
ISA Tax Planning
Remember that your 2017/18 ISA allowance must be used by 05 April 2018 otherwise it is lost forever. You cannot ‘roll over’ your ISA investment allowance into the following tax year.
You can invest £20,000 into ISAs in any one tax year. You do not have to invest the entirety of your £20,000 ISA limit, you can invest any amount up to this level but nothing more.
Nor do you have to invest in a single lump sum, you may spread your ISA investment across the year howsoever you see fit.
Given the large annual ISA limit, it is possible to build up a significant ISA holding over time by maximising the use of your annual ISA investment allowance each year.
Some ISA Facts:
- You can choose which ISA product to use.
You can choose to use your ISA allowance in any of the following ISA products: cash ISA, stocks and shares ISA, an innovative finance ISA, a lifetime ISA or any combination of the four as long as you don’t exceed the annual allowance.
- You can only pay into one Stocks and shares ISA and one Cash ISA in any one tax year. However, you can open a new ISA with a different provider each year if you want to.
- You can have a lifetime ISA (LISA) and a Cash ISA. The rules say you can only save up to £4,000 a year in a LISA. But you could still open a cash ISA, stocks & shares ISA and/or innovative finance ISA for the remainder of your allowance (or even split savings between all three).
- An Innovative Finance ISA – sometimes called an LFISA – is an ISA that contains peer-to-peer loans instead of cash (as in a cash ISA) or stocks and shares (as in an investment ISA).Peer-to-peer lending matches up investors, who are willing to lend, with borrowers, who could be individuals, businesses, or property developers and because you’re cutting out a bank by investing your money through an online portal – known as peer-to-peer lenders – you tend to earn higher rates of interest than a traditional savings account.
- Tax-free. From ISAs, not only is interest paid tax-free, but you do not even have to mention income from ISA savings on your self-assessment form.
Contact us today on 0161 4166572 to make the most of your ISA allowances and to plan a financial strategy that works for you.