ISA’s are savings/investment accounts, which are tax free for the first £20,000 deposited in the tax year. If possible, using up the full £20,000 before depositing into other types of savings accounts would be ideal, this means that any interest received, or gains on stocks and shares would be tax free on the full £20,000.
It is important to note that the limit is across all ISA’s and not for each account you open, so for example, if you had 4 ISA’s, you wouldn’t be able to deposit £20,000 into each account.
The tax savings on this can be quite significant, especially if you end up with a large sum of money in the ISA, which attracts a large sum of interest.
There is now an account called ‘Lifetime ISA’, which is a savings account for retirement or towards the purchase of your first house. This account receives 25% interest from the government and also will usually have an additional interest rate from the provider, like a usual savings account. You can deposit up to £4,000 per year and receive a maximum of £1,000 from the government each tax year. ‘Lifetime ISA’ can only be opened before your 40th birthday and we recommend it for the tax savings and high interest rate, but key to remember the restrictions when considering
Need advice for tax savings, look no further! Call the team at Holmes and Company on 01525 851101 or contact us here
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