Everything you need to know in ISA season
It’s ISA season, and the perfect opportunity to make the most of the tax free isa allowance. With the current ISA deadline looming, here we explain how to make the most of your money before the financial year ends.
The ISA tax free allowance 2024/25
The ISA allowance is the maximum amount of how much you can put in an ISA per tax year. The maximum ISA allowance is £20,000, of which £4,000 can be paid into a lifetime ISA.
You can split your Individual Savings Account (ISA) allowance however you like, across different ISA types, including cash ISAs, innovative finance ISAs and stocks and shares ISAs. There’s no Income Tax or Capital Gains Tax (CGT) to pay on any gains from ISA investments, so you won’t get taxed on the interest.
As of April 2024, you can also pay into more than one of each ISA type in a tax year. In previous years for example, you wouldn’t have been able to pay into multiple cash ISAs within the same tax year, but now you can.
Keep in mind that the allowance resets at the end of each tax year, which is the 5th April 2025.
Why is ISA season important for your savings?
ISA season is a good reminder to ‘use or lose’ the last of your annual allowance. Any remaining allowance can’t be carried over to the next tax year, which means you could be losing out on the chance of earning tax free interest.
How to make the most of your ISA before the deadline
ISA season is a great time to review your ISA accounts to ensure you’ve maximised your tax-free savings. If you’re yet to open one, it's quick and easy to do so via our savings hub, where you can apply online for fixed rate ISAs, cash ISAs and more.
Top up your savings before April
If you have less than £20,000 in your ISA, it could be an idea to make up the shortfall before the new tax year starts to make sure you benefit from the full savings potential. Having a goal in mind will help you consider what you can realistically save before April.
Boost your interest earned with different ISA types
Consider diversifying your investments by exploring different ISA options. By opening and paying into different types of ISAs, you can tailor your savings strategy to meet your financial goals, and maximise your savings - just make sure you stay within the limit.
Make sure your little ones are using their allowance
Talking to your kids about their savings can encourage great financial habits early on. A junior ISA is a great way to educate your children about the benefits of regularly putting money into an account, and can help to boost your total family savings.
If you’re yet to open an account for your young children, or you have a teenager preparing for university, our Young Savers Accounts are suitable for kids of all ages. Open up a Junior ISA before the April deadline for a tax free savings allowance of £9,000.
The new tax year has started. What should I do now?
A new tax year is a great time to explore your options. Take this opportunity to consider whether you want to save and invest into the likes of a stocks and shares ISA or reach your money more easily with an easy access cash ISA. It’s the perfect time to open an account, as you’ll have the full year to make the most of the allowance.
If you’re aged 18 or over and are interested in tax-free savings, visit our Savings Hub today.