Using an Individual Savings Account (ISA) is a great way to save tax-free throughout the year. As we speed through the last quarter of the 2022/2023 tax year, it’s becoming increasingly important to take advantage of your remaining allowance before the ISA deadline, otherwise it’ll be wasted.
What is the ISA allowance?
The ISA allowance is the amount of money you are allowed to save across all of your ISAs every year. Each individual has an allowance of £20,000 for the 2022/2023 tax year that they are allowed to save, and this can be distributed across their accounts how they see fit. The deadline for using your allowance is midnight on the 5th of April, as the new tax year then begins at 00:01 on the 6th April. In fact, if you don’t yet have an ISA (or would like to open another type of ISA), you still have until the deadline to open an account and take advantage of this year’s allowance!
How many ISAs are you allowed?
There are four types of ISA; cash, stocks and shares, innovative finance, and lifetime. You are allowed to put money into one of each kind of ISA every tax year, but together, these cannot exceed the total value of £20,000. It’s also important to note, though, that the lifetime ISA has a limited allowance of £4,000 each tax year, so this should be considered when distributing your savings throughout the year.
For example, you could distribute £6,000 in your cash ISA, £7,000 in your stocks and shares ISA, £3,000 in your innovative finance ISA and £4,000 in your lifetime ISA.
If you have dependants , you can also open a Junior ISA on their behalf. When they eventually turn 16, they can take control of the account, but they will be unable to withdraw money from it until they turn 18. For the 2022/2023 tax year, the Junior ISA allowance is £9,000, and this will also reset on the 6th of April, losing any remaining allowance. There are two types of Junior ISA; cash, and stocks and shares. A child can have either one or both types of Junior ISA.
The above is general advice concerning the ISA deadline. If you have any queries about this topic, please contact a member of the team directly on 020 7625 4545 or email firstname.lastname@example.org.
Warning: The above is merely general guidance and should not be relied upon as formal advice. The advice we give to each client will depend on their specific circumstances. We suggest you take professional advice before taking any action in relation to the issues discussed above.