1. TAKE YOUR ISA CONTRIBUTIONS TO THE MAX
An ISA (Individual Savings Account), allows you to save tax-efficiently into a cash savings or investment account.
Your allowance
With a Cash ISA or a Stocks & Shares ISA (or a combination of the two), you can save or invest up to £20,000 a year tax-efficiently.
Your ISA allowance doesn’t roll over into a subsequent tax year, so if you don’t use it, you’ll lose out forever.
Take advantage of your Spouse's allowance
If you are in a position to, it may make sense for you and your spouse to take advantage of each other’s ISA allowance, particularly if one of you has more financial resources than the other. That way, you can save (in the case of Cash ISAs) or invest (in the case of Stocks & Shares ISAs) up to £40,000 taxefficiently in the current tax year.
ISAs for 16 and 17 year olds
16 and 17-year-olds actually have two ISA allowances, as they’re able to open a Junior ISA (once they have transferred their Child Trust Fund [CTF] to their Junior ISA and closed the CTF), which for 2019/20 has a limit of £4,368, as well as an adult Cash ISA. This means that you could put away up to £24,368 in your child’s name tax-efficiently this tax year.
Lifetime ISA
People aged 18–39 can open a Lifetime ISA, which entitles them to save up to £4,000 taxefficiently a year until they’re 50. The Government will top up the savings by 25%, up to a maximum of £1,000 a year.
Viewing your and your spouse’s allowances as one will allow you to make the most of these tax advantages.
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