Have you used your annual ISA allowance?
The clock is ticking until the annual ISA deadline on 5th April - so if you’ve not used your ISA allowance this year, there is no time like the present to consider the options. Compared to a year ago the interest rates available from ISA providers both on instant access and fixed rates have come down significantly. However, there are alternative cash ISA solutions that you should consider. What's most important to remember is that if you don't use the current ISA allowance for this year you cannot claim it back.
What is the benefit of maximising my annual ISA allowance?
To put it into perspective, if you’d made use of your full ISA allowance every year since they were introduced in 1999, you could potentially now have over £40,000 in tax-efficient savings and investments – and that’s excluding interest earned.*
What’s the maximum amount I can put into an ISA this tax year?
Your annual ISA allowance starts on 6th April and ends on 5th April the following year. Now is a good time to remind yourself of the current rates and check that you’ve used your allowance to its full capacity.
Bear in mind that you can have one of each type of ISA in any given tax year – so, you can have one cash ISA and one stocks and shares ISA. The ISA limits for 2012/13 are:
Cash ISAs - £5,640 per person, per year
Stocks and shares ISAs - £11,280 per person, per year
Junior ISAs - £3,600 per child, per year
What’s the official 2012/13 ISA deadline?
Strictly speaking, you have until midnight on 5th April 2013 to use your ISA allowance. In practice, however, you probably don’t want to be trying to set up an account online at 11.55pm. For those who want to take advantage of smaller building society ISAs (which often offer competitive rates), you need to bear in mind that these often operate in branch or by post only, so you’ll need to allow time for this. In addition, banks and building societies have a track record of closing ISA applications early if a particular rate becomes oversubscribed. So, if you spot an attractive rate, you’ll need to act quickly to be sure of securing it.
What happens if I miss the 2012/13 ISA deadline?
Invariably, some people wait too long every year and end up missing the deadline. The bad news is, once it’s gone, it’s gone, and you’ll have missed this year’s chance to take advantage of your tax-efficient allowance.
The good news, however, is that you can immediately start saving or investing using next year’s ISA allowance, which comes into force on 6th April 2013. The total ISA allowance for 2013/14 is set to be £11,520 - a 2.1% rise on the previous year. Of this, £5,760 can be placed in a cash ISA. The junior ISA allowance will also rise after 6th April 2013 - from £3,600 in 2012/13 to £3,720 in 2013/14.
Use the Fair Investment tables below to compare some of the latest ISA deals.
* Source: Moneywise.co.uk
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.
The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. Different types of investment carry different levels of risk and may not be suitable for all investors.
Some structured investment plans are not capital protected and there may be the risk of losing some or all of your initial investment. There is also a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated, in which case you may not be entitled to compensation from the Financial Services Compensation Scheme (FSCS). In addition, you may not get back the full amount invested if the plan is not held for the full term. The past performance of the FTSE 100 Index is not a guide to its future performance.
© Fair Investment Company Limited