With the end of the tax year fast approaching (Monday 5 April), if you have any spare cash that you don’t need to access in the short term and would like to use some or all of this year’s ISA allowance, don’t leave it too late and risk missing out on this opportunity for tax efficient savings. Remember you can’t carry any unused allowance over to the next tax year, so timing is important and April will be upon us soon enough.
As a reminder, the ISA allowance for the 2020/21tax year is £20,000 and if you’re thinking of saving tax-efficiently for a child, the Junior ISA annual limit is £9,000.
You can put all the allowance into a cash ISA, or invest the whole amount into a stocks and shares ISA. You can also mix and match, putting some into cash and some into stocks and shares if you wish, as long as the combined amount doesn’t exceed your annual allowance.
Now, more than ever, it’s important for people to ensure their savings are offering the best return possible. Putting money aside tax-free is a simple way to make your savings work a little harder, an especially useful tool for those in higher tax brackets who don’t benefit from the Personal Savings Allowance.
Increasing your tax efficient savings
With many after-school kids’ clubs off the agenda, why not invest the average spend of £57.36 per week, totalling almost £2,200 over the course of a 38-week school year, into a Junior ISA? It all adds up and before you know it, it’s turned into a substantial amount.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
