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ISA allowance 2019-20 – use it or lose it

ISA allowance 2019-20

Remember to use it or lose it. Enable’s IFAs of Bishops Stortford know that it makes sense to use up your full £20,000 ISA allowance before April if you can afford it. If you have a £20,000 ISA allowance in the 2019-20 tax year and you can’t carry it forward to next year, so it’s worth thinking about making the most of your allowance before the tax year finishes on 5 April 2020.

If you’ve already decided to use this year’s allowance, remember that you can pay the full amount into either an investment ISA, cash ISA or an innovative finance ISA. Alternatively, you can split your allowance between any of these ISAs and the lifetime ISA,1 providing you stay within the overall £20,000 limit. The maximum you can pay into a lifetime ISA is £4,000 in each tax year.

Tax rules can change but as it stands at the moment there are great tax incentives to use ISAs as a saving vehicle. There’s no UK income or capital gains tax (CGT) to pay on any profits from buying and selling investments, within a tax-efficient investment ISA, subject to ISA conditions being met. You don’t pay tax on dividends from shares held in an ISA. Outside an ISA, all taxpayers have an annual tax-free dividend allowance of £2,000 in the 2019-20 tax year. 

There’s also no UK income tax to pay on any interest you earn from cash, funds, gilts or bonds within an ISA, and if you save into an innovative finance ISA, there’s no income tax to pay on the interest you earn from peer-to-peer lending platforms. ISAs really can protect your assets from tax over the long-term, enabling them to grow free of UK income tax, tax on dividends and CGT. Enables IFAs can help make sure you have used your ISA allowance wisely.

https://www.moneysavingexpert.com/savings/ISA-guide-savings-without-tax/

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