Tenet & You

There’s still time to use your ISA and JISA allowances

By Peter Pearson Independent Financial Adviser, Tenet&You

With the end of the tax year (5 April) in sight, now is the ideal time to double check you’ve taken full advantage of all your annual allowances with an experienced Financial Adviser assessing your options.

An Individual Savings Account (ISA) is a common account often associated with tax year end as it is a special type of account that gives you the opportunity to save or invest a certain amount of money every year, without having to pay tax on any growth in your investments or savings. However, it is important that you don’t leave it too late to act or you’ll run the risk of missing out, as you can’t carry over any unused allowance to the next tax year. So if you have cash you won’t need access to in the short term, now’s the time to invest it.

Your ISA Allowance

Standing at £20,000 for the 2021/22 tax year, you can save or invest up to this amount each tax year into either a Cash or Stocks and Shares ISA whilst shielding any interest, dividends or capital gains from tax. You can also adopt a mix and match approach, putting some into Cash, some into Stocks and Shares and the rest into Innovative Finance if you wish. However, the combined amount must not exceed your annual ISA allowance of £20,000. With pension contributions subject to annual and lifetime limits, ISAs are a very useful tool in topping up retirement income. There is no Income Tax or CGT payable on ISA proceeds.

In certain circumstances, investors can use existing holdings to open or top up their ISAs, this arrangement is known as a Bed & ISA. This is a way of transferring assets held outside an ISA into an ISA so that future investment income and growth are sheltered from tax. The investments are sold, cash is transferred into the ISA and the investments are repurchased. Charges apply and you could end up with a CGT liability if the gain you make on selling the asset, together with any other taxable gains you make within the tax year, exceeds the annual CGT allowance.

A Lifetime ISA is another option available to open for those aged 18 or over, but under 40, who want to buy their first home or save for later life. You can put in up to £4,000 each year, until you’re 50. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. This contribution counts toward your annual ISA limit of £20,000. Conditions apply.

Junior Individual Savings Account (JISA) contributions

Why not take the time to give your children’s savings a boost? JISAs are a tax-efficient way to build up savings for your children (and grandchildren) and can be opened for any child under 18, living in the UK. The money can be held in Cash and/or invested in Stocks and Shares. They work in exactly the same way as your own ISA; however, the maximum investment is £9,000 per child for the 2021/22 tax year.

A great opportunity

With interest rates currently so low, it’s more important than ever to ensure your savings are working hard for you. The ability to save up to £20,000 taxfree is one way of achieving a higher return, especially for those in higher or additional rate tax bands, who don’t benefit fully or at all from the Personal Savings Allowance.

Talk to an adviser

For advice on using this tax year’s ISA allowance before it’s too late, get in touch with the Tenet&You team to arrange an appointment with one of our Financial Advisers, who will take the time to understand your objectives and advise you on the course of action most appropriate for your circumstances. Whether you’re in a position to use some or all of your allowance, we can help; rest assured small, regular contributions soon add up.

You can reach us by calling 01772 787011 or come and visit us in person at Tenet&You, 327 Garstang Road, Fulwood, PR2 9UP.

Alternatively, you can also find out more about Tenet&You on our website, www.tenetandyou.co.uk.

The value of investments and the income from them may go down. You may not get back the original amount invested.