ISAs (individual savings accounts) provide a simple and tax-free way to save for the future. On 6th April 2017, the government increased the annual ISA allowance from £15,240 to £20,000 – and the figure remains at £20,000 for the 2019/20 and 2020/21 tax years.
This means you can save up to £20,000 in a stocks and shares ISA, and any growth or income achieved is absolutely free from tax.
These generous tax benefits have helped ISAs remain exceptionally popular since they were introduced in 1999. The increased allowance is great news for savers trying to grow their money, especially against the backdrop of historically low interest rates on cash savings accounts.
Understand your options
When it comes to investing in your ISA, it’s important to understand the options available and choose the right investments for you. For example, you need to work out your attitude to risk, as well as whether you’ll need access to the money in the short-term or can leave it to grow over time.
While some people leave ISA investing until the end of the tax year, if you invest at the beginning there’s much more time for your investment to hopefully acheive that highly attractive tax-free growth.
Use it or lose it
Tax years run from the 6th April to the 5th April – if you don’t use your ISA allowance before the tax year ends, it’s gone for good, and you’ll have missed out on a generous tax break.
To find out about ISAs, get in touch with our Investments and Pensions service. We can refer you to Hargreaves Lansdown and even arrange a free consultation.