Don’t forget to use your ISA allowance
An Individual Savings Account (ISA) provides a rare opportunity to shelter your money from the taxman. For every pound you put in, you pay no tax or any capital gains on income or growth earned during its term. You do not even have to declare its existence to the taxman.
Use it or lose it
You only receive one Individual Savings Account (ISA) allowance each tax year. Since it cannot be carried over into the next year, if you do not use it, you will lose it.
The annual allowance for this tax year (2013-2014) is £11,520. Up to £5,760 can be invested in cash with the remainder in a stocks and shares ISA. Many investors wait until the last minute to use their allowance but there is no reason to delay. In fact, investing early allows you to gain maximum benefit from the associated tax breaks – for example, the earlier you put your money into a deposit account, the more interest you will earn.
If you are concerned about market volatility, regularly ‘drip-feeding’ money into the market can reduce the risk of buying when prices have peaked, while ensuring you invest at a range of different price levels (also known as pound cost averaging). This system offers long-term benefits –particularly for nervous or first-time investors or during periods of significant market volatility.
For all you regular ISA investors the annual allowance for 2014-2015 has been set at £11,880 with a £5,940 allowance for cash ISA’s.
As alluded to earlier, you only receive one ISA allowance for each tax year, therefore it is best to begin your research early and speak to a financial adviser regarding all your options.
We are able to offer advice with regards other investment vehicles. This can include investments that are able to transfer partially into ISA “status” on an annual basis. This can be very beneficial for lump sum investments that happen to be over the ISA allowance.
Paul Hoskin Hoskin Financial Planning
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