The tax year started in April 2018, but it’s not too late to make the most of your ISA allowance if you haven’t done so already. For the 2018/2019 tax year you can invest £20,000 in ISAs, you aren’t just limited to one.
The world of ISAs can seem complicated, but they are considered a great way to boost savings tax-free. Therefore, it can be very beneficial to make the most of your annual allowance.
Cash and Stocks and Shares ISA
Whilst there is a variety of different ISAs, the majority fall into either the cash or stocks and shares brackets. You can either save a lump sum or pop money into either every month or so. Different ISAs allow you to invest a different lump sum or amount every month and finding out these figures will help you decide which ISA could be best for you.
Popular ISAs
Two of the most popular ISAs currently available in the UK are the Help to Buy ISA and Lifetime ISA. With many first-time buyers struggling to secure a property in the country, the government bonus offered with each ISA is undoubtedly a huge incentive that has led to both the ISA’s success.
Help to Buy ISA
There is just under a year to open a new Help to Buy ISA; opening an account will be closed as of 30th November 2019. The Help to Buy ISA is targeted at first time buyers, offering tax-free returns and a 25% bonus from the government if you save a minimum of £1,600.
You can open an account with an initial maximum deposit of £1,200 and up to £200 a month thereafter. However, once the month is over you will miss out on investing for that period.
Lifetime ISA
Launched in 2017, the Lifetime ISA allows you to save for your first home or for retirement. Anybody aged 18 to 39 can open a Lifetime ISA and save until they are 50-years-old. Investors can place up to £4,000 each year into their ISA and the government add a 25% bonus to the savings, up to a maximum of £1,000 annually.
Savers have no maximum monthly contribution to abide by, so you can save as much or as little as you want.
Splitting your ISA allowance
Your maximum investment into ISAs is £20,000. Whilst you can place this money into one ISA, you are also welcome to split it across multiple accounts. For example, you could invest £10,000 in a stocks and shares ISA, £5,000 in a cash ISA, and a further £5,000 in an IFISA.
Your ISAs will not allow you to invest beyond the monthly or yearly limit imposed so you will not be able to make a mistake when deciding what to do with your ISA allowance. Tax-free returns on £20,000 is surely an investment opportunity not to be missed? However, if you are unsure of what to do with your money you should seek the expert advice of a financial adviser.