Making the most of your tax-free ISA allowance
Each tax year runs from April 6th through to April 5th the following year, impacting how much you can save tax-free each year.
Tax treatments depend on your individual circumstances and may change in the future.
The end of each tax year is also when your current allowance runs out.
Even though it affects anyone who has a Junior ISA or Personal Pension, this blog concentrates on what it means for ISA holders.
And, if you are looking to make the most of your ISA allowance, then Wealthify might be able to help! Because, when you invest at least £500 in a Wealthify Stocks & Shares ISA via TopCashback, you could earn between £5 and £1,000 cashback! New customers only. T&Cs apply. Capital at risk.
Information provided does not show actual performance and is not intended to show potential future investment growth.
What the tax year end means for your ISA
Each year, you’re given an allowance by the government for the amount of money you’re able to save tax-free. Currently, this is set at £20,000, and each year you can open one of each type of ISA:
- Cash ISA
- Stocks and Shares ISA
- Lifetime ISA
- Innovative Finance ISA
It’s worth mentioning that the Lifetime ISA has a limit of £4,000 a year (which is included in your £20,000 allowance), but all other ISAs allow you to top up the full amount if you wanted to.
However, you can always spread your annual allowance across different ISA types; for example, £10,000 in Cash ISA and £10,000 in a Stocks and Shares ISA.
The end of tax year also marks the end for your ISA allowance. So, if you haven’t used the full ISA allowance it could be worth adding to your ISA (if you can afford to do so).
What if I can’t use my full ISA allowance?
The beauty of an ISA is that any gains remain tax-free.
So, if you put £1,000 in your ISA this year, you’ll still have a £20,000 limit next year.
And this is what the end of a tax year means for ISA holders: another chance to save in a tax-efficient way.
This resetting is especially important, because say you managed to save £5,000 a year, you would max out your annual ISA allowance in just four years.
But thanks to new tax years resetting this limit, you could save £5,000 tax-free in an ISA every year for 10, 20, or 30 years — and keep building up your pot!
Why choose Wealthify for your ISA?
The Wealthify Stocks and Shares ISA could be a great way for UK residents to invest up to £20,000 tax-efficiently each year, with no capital gains tax or income tax to pay on your money as it grows.
Regardless of your knowledge and experience, Wealthify have made the process of investing as simple as possible — starting from as little as £1.
All you have to do is choose your investment style (from Cautious to Adventurous) and theme (Original or Ethical), then just let their team of investment experts manage everything else for you!
What’s more, when you do invest at least £500 in a Wealthify Stocks & Shares ISA via TopCashback, you could earn between £5 and £1,000 cashback. New customers only. T&Cs apply. Capital at risk.
Please remember the value of your investments can go down as well as up, and you could get back less than invested. Past performance is not a reliable indicator of future results.
The tax treatment of your investment will depend on your individual circumstances and may change in the future
Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.
TopCashback Limited is an introducer appointed representative of Wealthify Limited which is authorised and regulated by the Financial Conduct Authority.
