Don’t be taxed – make full use of your ISA allowance
A full uptake of your annual ISA allowance will ensure that tax efficiency remains at the centre of your overall savings strategy.
The annual ISA savings allowance for 2012/13 is £11,280. This is the total for both ISA types, the cash ISA and the stocks and shares ISA. Of this, up to half, or £5,640, can be saved in the cash ISA. Alternatively, the full £11,280 can be used for tax efficient saving in the stocks and shares ISA.
The allowances are renewed each year, which wipes your slate clean and allows you to begin investing another £11,280, and receiving tax-free growth on any income from your ISAs allowance.
We can help you take advantage of your ISA allowance. Talk to our team with a savings enquiry online or ring 0800 678 5929 now.
ISA allowance for the cash ISA
For conservative savers, the cash ISA can provide the best of both worlds: the security of the bank account, with the advantage of tax-free growth. For that reason, many believe it no longer makes sense to leave money in an ordinary bank or building society account, when it could be growing tax-free in a cash ISA.
By using their cash ISA allowance of £5,640 each year, savers can quickly build up a nest egg with tax-free growth on their savings. The growth can either be taken out or left in the account, earning further tax-free interest in the following year. Using the ISA saving allowance, therefore, offers a considerable advantage over the conventional bank account, where growth in your savings is taxed at your marginal rate, which for the basic rate taxpayer is 20%.
ISA allowance for the stocks and shares ISA
The stocks and shares ISA offers tax-efficient (but not entirely tax free savings) savings invested in the stock markets. It gives the potential for a larger annual investment that has the potential to outperform cash in the longer term. If you have not used half your annual ISA allowance in the cash ISA, you can invest your full ISA saving allowance of £11,2800 in the stocks and shares ISA.
As a stock market investment, the stocks and shares ISA is a little more risky than the cash ISA, but with the possibility of more attractive returns, over the long term.
Dont miss out on tax-free growth – ask us how to use your ISA allowance. Talk to our savings team with a savings enquiry online or ring 0800 678 5929 now.
