Six tips for last minute ISAs

ISAs are one of the simplest ways to invest and save tax. Here’s some tips for investors looking to use their allowance before April 5th.

This content is more than 6 months old now, please visit the news area of this site for more recent content

  1. Rob Morgan
  1. Use your ISA allowance as far as you can

You can currently invest up to £20,000 a year with an ISA, often the first port of call for those looking to save tax. They are simple, flexible and tax-efficient. Gains realised on the sale of stocks and shares within an ISA are free from tax, and so is any income from dividends or interest.

Even if keeping your money outside the clutches of the tax man doesn’t seem relevant now, it might in the future. It could be worth planning ahead for when your wealth grows.

The ISA allowance is available to any UK resident over 18 and can be split between different types – the most common being Cash and Stocks & Shares. Charles Stanley Direct offers Stocks & Shares ISAs.

A Stocks & Shares ISA could deliver a higher return than Cash ISAs over the longer term, but remember that there is a risk the value of your investments could fall – especially in the short term.

  1. Don’t rush into an investment decision

If you're unsure where to invest in your Stocks & Shares ISA, you can always secure this year's allowance with cash now and decide later. There is no charge for holding cash but please note that no interest is paid currently so this should be only be considered as a temporary measure.

There are also some ideas on how you might use your ISA allowance here, and for investors looking for socially responsible investment ideas, we outline some options here.

  1. Consider your spouse’s allowance too

If you are married or in a civil partnership it’s possible to organise your affairs efficiently so that tax free allowances aren’t lost.

  1. Don’t forget the kids

Junior ISAs are a popular way for family and friends to build up tax-efficient savings and investments for a child. The tax benefits are the same as an adult ISA – no capital gains tax, and no further tax to pay on income.

Withdrawals are possible from the age of 18 when it automatically converts to an adult ISA, meaning the pot can be useful to help with the cost of university or a deposit for a house. This tax year’s Junior ISA allowance is £4,368 per child.

Find out more about Junior ISAs

  1. Pensions are also an option

Pensions are often a highly effective means of investing for retirement owing to the tax relief available on payments into them.

Currently, anyone under 75 with relevant UK earnings can receive tax relief when they make a contribution within the annual allowance to a personal pension such as the Charles Stanley Direct SIPP. 20% is added by HMRC and any further higher or additional rate income tax relief can be reclaimed – a potentially a simple way of reducing your income tax bill for the year.

Find out more about pension tax relief

  1. Don’t leave everything until the last minute

You can make payments into your Charles Stanley Direct ISA online using your debit card until midnight on Friday, 5 April. This is via the "Pay Money In" link under the "Manage my money" section of the site on your My Accounts page. We recommend that you don’t leave subscriptions until the last minute in case you encounter a problem making a payment, though.

Need help?

Please visit our FAQs or contact our Helpdesk at [email protected], on 0131 550 1234 or via Secure Message from your dashboard. With our special end of tax year hours they will be available until midnight on Sunday, 5 April.

This website is not personal advice based on your circumstances. Charles Stanley Direct is not a tax adviser.  Information contained in this article is based on our understanding of current HMRC legislation.  Tax reliefs are those currently applying and the levels and bases of taxation can change.  Tax treatment depends on the individual circumstances of each person or entity and may be subject to change in the future.  If you are in any doubt, you should seek professional tax advice.

More from author

  1. Rob Morgan

    May's top and bottom performing funds

    Date: 23rd Mar 2020 13:15pm

    A round up of the notable market and fund sector trends in May, a month of bearish ne...

  2. Rob Morgan

    Liontrust Special Situations – fund update

    Date: 23rd Mar 2020 13:15pm

    This UK fund has held up reasonably well amidst recent turbulent markets owing to its...

  3. Rob Morgan

    Threadneedle UK Social Bond – fund update

    Date: 23rd Mar 2020 13:15pm

    This fund’s low volatility and high social impact style could resonate with socially ...

Most read articles

  1. Six tips for last minute ISAs

    China drives into global trouble

    Date: 23rd Mar 2020 13:15pm

    China may discover that more counties in the world now intend to stand up to Beijing’...

  2. Six tips for last minute ISAs

    'Housebound' episode twelve

    Date: 23rd Mar 2020 13:15pm

    Erica Whyte FaceTimes Louise Miller, Head of Client Services, about meeting the chall...

  3. Six tips for last minute ISAs

    Investment strategy in a virus-filled world

    Date: 23rd Mar 2020 13:15pm

    Charles Stanley’s Investment Strategy Committee met this week – here are its conclusi...

Investment involves risk. You may get back less than invested.