Believe it or not, it's that time of year again. For many, the end of the tax year isn't on their calendar and the 5th April is just like any other day, but considering investing in an ISA before the deadline is up could mean big tax savings on your investment into the future, year-in, year out.
Making sure you use your ISA allowance is a hot topic this week and it seems that everyone is talking about it. Picking the right investment shouldn't be a hasty task and with the deadline fast approaching you may be feeling the pressure to choose. However, you don't need to decide right away, park up your money in an ISA account and decide later which are the best funds for you. So, if the ISA is a foreign term for you but you would like to learn more, let us help you.
What is an ISA?
The Individual Savings Account represents one of the best available tax breaks to all UK residents. This savings vehicle started life in 1997 and was brought in by the then chancellor of the exchequer, Nigel Lawson.
Since its humble beginnings, it has now grown into a tax-free allowance of £15,240 which can be invested in stocks and shares, cash or any combination of the two. From 6 April 2017 the annual ISA allowance rises to £20,000.
Anyone aged 18 or over can invest in a Stocks and Shares ISA, however you only need to be 16 to invest in a Cash ISA.
When is the deadline?
For your savings to count into this financial year (2016-2017), you must save or invest your money by the 5th of April at 23:59. Any unused allowance will not roll over and it will be lost forever.
Why should I use my ISA allowance to invest in Stock and Shares?
With a Stocks and Shares ISA you will not pay any tax on any capital gains tax on profits made from share price increases. Investing this way outside of an ISA would mean that annual capital gains would be subject to 18% tax for basic tax-payers and 28% for higher-rate and additional-rate taxpayers.
Through this type of investment, you will also receive tax relief on dividends when in an ISA agreement. Outside of an ISA, you would receive a £5,000 dividend income allowance and anything above that higher and additional-rate tax payers would pay 25% and 30.56% respectively.
It is, however, always important to remember that your money could be at risk, the value of investments or income may go down as well as up and you may not necessarily get back the amount you invested. The advantageous tax treatment of ISAs is not guaranteed to continue and may be subject to future statutory change.
How can Elson Associates help me?
At Elson Associates, we don't give advice but we do offer a cost-effective range of services tailored to you. We have been helping arrange discounts on investments for over 20 years and take pride in delivering a fast, efficient and accurate service. Want to learn what our clients say about us? Visit our testimonials page to read more; click here.
If you want to find out how we can help you secure your investment today before the deadline is up, then give us a call on 0800 0961111 or contact us via our contact page; click here.