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ISA Contributions 2018/19

Most people know what an Individual Savings Account (ISA) is, and how tax-efficient they can be when used within an investment portfolio, and are also aware that we are approaching ‘ISA season’!

There are two types of ISA available - the cash ISA and a stocks and shares ISA. The maximum allowance for the 2018/19 tax year is £20,000 per person. ISA’s have been around since 1999 and if you have been investing the maximum amounts since then, you will have built up a considerable, and extremely tax-efficient investment.

Most people are also aware that if you do not use your ISA allowance you will lose it! This means that you cannot carry forward any unused allowances from previous years, and it is therefore crucial the payments are made well before the end of the tax year, to ensure the money is both received and invested. If you are looking to make a contribution to your existing ISA,  or to start a new ISA then you should do this within the next few weeks, and do not leave it until early April, as many investment companies and providers will not accept payment in the few days before the tax year ends.

Although ISA’s have been around for 20 years, they can still cause some confusion, and we  strongly recommend that you speak to you adviser if you are in any doubt about the type of ISA that is suitable for you, or the amounts that you can contribute.  For example, not everyone knows that if you have an existing cash ISA, it is possible for this to be transferred to a stocks and shares ISA, and vice versa, without impacting on your £20,000 allowance. We can give you advice on all types of ISA, although most of our clients use the stocks and shares ISA, with the underlying investment being either unit trusts or open-ended investment companies. A stocks and shares ISA can be designed to suit your investment time scales, attitude to risk,  income needs etc., so it is important that you take advice to find the most appropriate structure. Many of the ISA companies we use will provide you with online access to your ISA, so that you can monitor the performance and progress of the investment. This is not an alternative to receiving regular ongoing reviews from your financial adviser, but does allow you to quickly and easily see how the Investment is progressing. This access is generally a good thing as it means clients can become more involved with the ongoing advisory process, which in turn means a closer and more meaningful discussion can take place when speaking to the adviser.

This entry was posted on March 4, 2019

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