Individual Savings Accounts (ISAs) allow us to save tax-free. With the end of the 2020/2021 financial year fast approaching, we encourage all readers to maximise their allowances before the April 5 deadline.
Read on to learn more about ISAs, including the various types, current allowances, and the importance of making contributions.
ISAs allow you to save cash and stocks tax-free. There are four types of adult ISAs:
- Stocks and shares ISAs
- Lifetime ISAs
- Innovative finance ISAs
- Cash ISAs
ISA allowances in 2020/2021
In the 2020/2021 tax year, the ISA allowance is £20,000. You can save up to this amount in one account or split the allowance across multiple types of ISA. In addition to the £20,000 total allowance, you can only contribute a maximum of £4,000 into a lifetime ISA each year.
A note on Junior ISAs
Junior ISA’s are available to children under 18 years of age, living in the UK. There are two kinds of junior ISA: cash, and stocks and shares. In the 2020/2021 tax year, the allowance for a junior ISA is £9,000. This is an increase from the previous financial year where the allowance was £4,368.
Why make ISA contributions?
ISAs have many benefits, including:
- Tax-free saving.
- Can make withdrawals tax-free at any time.
- Can invest cash, shares, stocks, or a combination.
- Available to all adults.
- No limit to the number of ISAs, only the contribution amounts each year.
Important ISA deadlines in 2021
You cannot use previous years’ tax allowance in the current year.
Balances do not carry over so if you don’t use them, you lose them.
Your ISA allowance will renew on 6 April 2021 at the start of the new tax year.
Don’t miss your allowance for this tax year! Get in touch for further investment advice.
For tailored assistance with wealth management, business protection or financial planning, contact the Duke Godley team.
If you need financial planning support heading into the new tax year, you can contact the Duke Godley team. Get in touch with our team today via 020 8515 1200 or email us at firstname.lastname@example.org.
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The Financial Conduct Authority does not regulate taxation, trust advice, will writing, and Savings products.
Duke Godley Financial Planning Limited is authorised and regulated by the Financial Conduct Authority.