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ISA Allowance – Use it or Lose it

Category: IFAs

Time is running out to take advantage of the £20,000 tax-free ISA allowance before the deadline of April 5th. ISAs offer the most generous tax breaks available from the government.

If you have savings and haven’t yet taken advantage of your ISA allowance for this year, then you must save or invest before the cut off date to reap the benefits. Any unused allowance doesn’t roll over, so you lose it forever.

One of the advantages of placing your savings into an ISA is that you can take your money back out at any time, without losing any of the tax benefits. So if you are worried about your circumstances changing and needing quick access to your money, ISAs give you that flexibility.

There are further tax benefits if you decide to use a stocks and shares ISA as part of your investment strategy.

  • No tax on profits. You don’t have to pay any capital gains tax on profits made from share price increases.
  • No tax on interest earned on bonds. You get to keep it all.
  • No tax on dividend income. Inside an ISA, you don’t pay tax on dividends. Outside an ISA, you’d get a £5,000 dividend income allowance, and above that higher- and additional rate taxpayers would pay 25% and 30.56% respectively.

If you already have money in ISAs then you need to know how they are performing, this is more important than ever with the volatile markets we are experiencing post-Brexit.

At Hartsfield, we offer a free ISA health check, where we review your ISAs against your risk profile, their performance, whether they are likely to meet your targets and their level of charges. Investments shouldn’t be left to languish unattended, and ISAs are no different. We’ll be able to tell you whether the level of risk you are taking matches the level you want to take, and we’ll be able to confirm whether or not your ISAs are on track to meet their goals.

Please get in touch with the Hartsfield team to talk about ISAs and tax-efficient investing.

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