With such a vast range of options available for both Cash ISAs and Investment ISAs, it can be easy to lose track and with the 5th April 2012 deadline fast approaching, we thought you might like some guidance as to how to find the best way forward.
By answering the questions below we’ll help you keep on track and make sure you maximise the opportunities available with this valuable tax benefit.
Have I maximised my ISA allowance?
The cash ISA allowance is £5,340 for the current tax year, rising to £5,640 for the next tax year (2012/13) which starts on 6th April 2012. The investment ISA allowance is £10,680 for the current tax year, rising to £11,280 for the 2012/13 tax year.
Remember, even if you put the maximum into a cash ISA, you are still able to invest up to £5,340 this tax year and £5,640 in the next tax year in an investment ISA. This is in addition to any existing ISAs you decide to transfer.
Has my partner maximised their ISA allowance?
Always remember that the ISA allowance is not just an annual allowance but is also granted to each individual. This means that a couple maximising their investment ISA allowance for both this current tax year as well as the next, has the opportunity to make new investments of up to £43,920 in total. To help you, many investment plans and cash ISA alternatives are offering the option to take advantage of both years’ ISA allowances at the same time.
Is my current ISA provider offering the highest returns?
Many cash ISAs offer an introductory rate which ceases after a period of time, often leaving you with a rate which is uncompetitive when compared to current market offerings. Switching provider is normally relatively simple and most will accept transfers. Check the rate you are receiving by looking at your most recent statement and then compare this against all of the options the market has to offer. Always remember to check there are no charges or penalties before proceeding.
Do I know what options there are?
Don’t assume that the savings or investment plan you took out previously is the best the market has to offer. The market is constantly developing new ideas for both cash ISAs and investment ISAs, and the power of the internet allows you to review these quickly and yet comprehensively.
What options does my investment fund ISA provider offer?
Many funds are held in investment ISAs but checking the range of alternative funds available as well as the discounts on offer for new investments could make all the difference. The Fair Investment Fund Supermarket offers over 1,500 funds from more than 90 investment managers, many of which have 0% initial charge.
Have I fully considered the effects of inflation on my ISAs?
The pressures on fixed rates remain and the consensus is that the low interest rate environment looks set to continue well into 2015. Although inflation has come down in recent months, it is still well above target levels and there is great uncertainty about what could happen, particularly in the longer term. The effects of receiving a return which is less than inflation are even greater over time, and understanding the impact of this prior to making a decision is extremely important.
Have I considered saving monthly?
The greatest benefits are achieved by maximising your ISA allowance each and every year but if this proves too difficult, why not consider setting up a monthly payment? Although many of the fixed rates and investment plans are lump sum options only, the Fair Investment Fund Supermarket accepts monthly payments from as little as £50 per month. The increased ISA allowance for the 2012/13 tax year equates to investing up to £940 per month and remember, this is per individual.
Am I prepared for the 2012/13 tax year?
In order to maximise the tax break available, it is best practise to utilise your full allowance right at the start of the new tax year in order to have the beneficial tax treatment for the full tax year. Many of our current top picks and ISA season selections offer you the ability to apply for both the current tax year as well as the next, thus ensuring that you are well and truly prepared.
Have I applied in good time?
Having found the best deal for you, nothing could be worse that missing the deadline. Therefore, make sure you apply in good time and if this involves the postal service, do not rely on first class being next day. As the best deals will prove the most popular, there is also the possibility that some of these will disappear or close at very short notice, so always apply as soon as possible.
Fair Investment Company is a savings and investment specialist and we have a constantly updated range of savings and investment plans across both cash ISAs and investment ISAs. Take full advantage of the power of the internet and visit us frequently to review our market-leading rates as well as our savings and investment selections in order to make sure you get the best the market has to offer.
See the following articles for further help and guidance in the run up to the end of the tax year:
ISA season latest top picks » Top 10 tips for ISA season » ISA season selection »
No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.
© Fair Investment Company Limited