A Helpful Guide to ISA Allowances for 2019/2020admin
A Helpful Guide to ISA Allowances for 2019/2020
As 2019 draws to a close, some of you will already be thinking ahead to the new tax year. But is the main thing you would like to know how much money you can put away into an ISA?
For the 2019/2020 tax year, the ISA allowance is £20,000. You can split this amount over many various areas such as stock & shares ISA’s and Cash ISA’s. Or you can choose to put the full amount all into one ISA. This £20,000 pounds figure has not changed since 2017 but the junior ISA allowance for investing for children is now £4,368 instead of £4,260.
Did you know?
The number of Adult ISA accounts subscribed to fell from 11.1 million in 2016/17 to 10.8 million in 2017/18.
What is an ISA
An ISA is an Individual Savings Account, which permits you to save tax-free into cash savings or an investment account. ISAs are offered by banks, building societies, insurers and many more.
There are several different varieties of ISAs available and it is easy to become confounded when deciding which is the best way to save your money. Each type of ISA has its own benefits and understanding these are crucial to reaching the right choice. Below is a list of the different types of ISAs available:
Different Types of ISA’S
Help to buy – The help to buy scheme was created to help back cash ISA savings for first-time buyers getting on the housing ladder. This scheme finished on the 30th November 2019. When activating a help to buy ISA the maximum allowance you can deposit is £200 a month, with an initial deposit of up to £1,200. This is inclusive of your first monthly payment of up to £200.
Lifetime ISA – A lifetime ISA is a government-backed saving scheme to help buy your first home or to save for your retirement.
Cash ISA – A cash ISA is very similar to a traditional savings account, but the main variation being that there are limits on the amount of money you can deposit in each tax year, and you don’t pay any tax when you earn interest.
Stocks and Shares ISA – A stock and shares ISA is an investment account, where all capital gains and income are protected from tax.
Junior ISA – These are a great way to build up cash savings for anyone under the age of 18. A parent or guardian can open up the account and make it accessible so friends and family can contribute to the ISA. This too is a stocks and shares ISA, utilising medium-low risk tactics to investment. No one under the age of 18 can withdraw from the account. There is also a tax-free limit for donations to Junior ISAs, which is more profound than for adults.
Innovative Finance ISA – An Innovative Finance ISA known as an IFISA allows you to use your tax-free individual savings account (ISA) allowance while investing in a peer to peer lending scheme.
What does an ISA Allowance mean
In a nutshell, it’s the amount that you can put into an individual savings account each tax year, without paying tax on any money your ISAs make.
Use it or Lose it
You need to remember that at the beginning of each new tax year, your annual ISA allowance resets. You cannot transfer your allowance over between years, so if you don’t use it you lose it. Back in April 2016, the Government made changes that allow you to take money out of your ISA and replace it in the same tax year without using up your allowance.
We recognise that ISAs can be difficult to understand or discover which is best for you. Our team give you all your options and help you find the best person who can assist you with your individual requirements. Call our team today on 01422 897808 or fill in our contact page.