As we have just started tax year 2024/25, now is the time to consider investing in a new or existing ISA.
ISAs are a tax-efficient way to save and invest your money. Any interest, gains or profit you make are exempt from income tax and capital gains tax.
The Government sets the ISA allowance each tax year, which begins on 6th April and ends on 5th April. For the current tax year 2024/25, the ISA allowance is £20,000.
From 6th April 2024, you no longer have to commit to a single ISA provider for each ISA type per tax year. You can now pay into ISAs of the same type with different providers within a tax year. You can invest across the range of different ISAs but only up to a maximum of £20,000 per tax year.
You will get a new ISA allowance each tax year, however, if you do not use all your allowance in the current tax year, it cannot be carried over to the following year.
There are different types of ISAs and it will depend on your financial goals which one suits you best.
Cash ISAs:
Variable rate or easy access – this offers instant access to your money without paying a penalty.
Fixed-rate - this offers a set interest rate for your money which will be tied in for a set period of time such as one, three or five years. If you withdraw your money before the period ends then you will have a penalty to pay.
Stocks and Shares (Investment) ISAs
With a Stocks and Shares ISA you can buy shares, funds and other types of investments and you will not pay dividend, capital gains or income taxes on any gains or income from investments held. This may be a good choice for you if you’re planning for the future and are looking for a longer-term investment. As with all investments your capital is at risk and you may get back less than you invest.
Lifetime ISA (LISA) (maximum £4,000 per year)
A LISA is a flexible and affordable way for first time buyers aged 18-39 to save for their first home, or you can save for your retirement. You can save up to £4,000 each tax year and the government will top the amount saved up by 25%, meaning an extra £1,000 bonus from the Government if you save the full £4,000. If you are saving for later life, you will not get the Government bonus until you turn 50.
Junior ISA (JISA) (maximum £9,000 per year)
If you are a parent or legal guardian of a child you can also open a Junior ISA for them. The maximum allowance for the current tax year 20204/25 is £9,000 and anyone can contribute to it. This is not part of your £20,000 ISA allowance.
In order to ensure you are making the most of your ISA allowance, please contact us for advice.
8 April 2024
The views expressed in this blog do not in any way constitute advice and are specific to the date noted. As time passes the facts can change and readers should consult their adviser for up to date advice on any matters covered within the blog. Invest Southwest offers an initial review, which is free of charge, however long it takes. From this we will be able to confirm how we can help and give you an opportunity to decide if you would like us to. Thereafter, we will provide you with detailed recommendations and exact costs. Please note that we promise not to levy any kind of fee unless we can demonstrate a benefit to you.
