How to maximise your ISA before the new tax year
When was the last time you thought about your ISA? With the end of the tax year approaching, and new ISA rules coming into force in April 2024, how to maximise your ISA may be something that’s playing on your mind.
But first, a quick refresher on ISAs. An ISA is an Individual Savings Account that allows you to make tax-free savings up to a certain allowance each year. (Currently £20,000 on adult ISAs and £9,000 on junior ISAs.)
When it comes to your ISA allowance, use it or lose it. With that in mind, here are a handful of ways to give your savings a boost before April 6th…
There are many kinds of ISA. Some of the most popular are Easy Access, Junior, Fixed Rate, and Notice. Choosing the right ISA for goals can help you maximise your savings.
Notice Cash ISA
As the name suggests, you need to give notice before accessing your funds. You might like to consider an option like this to help you retain the funds you already have as you continue to top up.
Fixed Rate ISA
If favourable interest rates are your biggest priority when choosing an ISA, Fixed Rate ISAs may offer you a higher rate.
Easy access ISA
This type of ISA offers greater flexibility for short-term and emergency savings and allows you to make notice-free withdrawals at any time. Sometimes Easy Access ISAs offer a bonus interest rate for the first 12 months, which drops after the first year.
More information on the different types of ISAs can be found on our Cash ISAs information page. For our latest range of available ISA’s check out our Savings page.
If you have less than £20,000 in your ISA, you might like to think about how you could make up the shortfall before the new tax year begins. Having a goal in mind can help. You might like to aim for the £20,000 allowance or set a more modest goal, depending on what feels manageable for you.
Consider what funds you currently have available to you and what you can realistically save before the end of the financial year. One savings strategy is to put around 20% of your income into savings – but you can opt for more or less depending on your own situation. To help you remember put a little away each month the amount, you might consider setting up a standing order so you can make regular payments into your ISA between now and the end of the financial year.
If you want to cultivate good financial habits and build your total savings as a family, don’t forget to encourage your kids to top up their ISAs before the end of the tax year too.
Junior ISAs have a tax-free savings allowance of £9,000 – so you might like to encourage the younger members of your family to put any extra pocket money into their junior ISAs, instead of their piggy banks.
By now you know that the maximum tax-free amount you can save into an ISA is £20,000. Did you know that you can choose whether to invest the whole lot in one ISA, or spread your money across different types of ISA?
You can explore different classes of ISAs, such as Cash ISAs, Stocks and Shares ISAs, Lifetime ISAs, and Innovative Finance ISAs.
Currently, you can put money into one of each type of ISA every tax year. You might like to look at other kinds of ISA – like the ones we’ve mentioned above – when thinking about how to maximise your savings.
Understanding ISAs and how to make the most of them can be overwhelming. Topping up before April 5th and choosing the right ISA for your goals could boost your savings and make your money work harder for you.
