This content is for information and inspiration purposes only. It should not be taken as financial advice or investment advice. To receive tailored, regulated advice regarding your investments and financial goals, please consult an independent financial adviser here at Suttons IFA in Sale, Manchester or wider Cheshire area.
As we approach the end of the 2019-20 financial year, doubtless you will have heard much from financial advisers here in Cheshire and across the country about using your allowances before the 5th April deadline. This isn’t without good reason, particularly since any unused, tax-free ISA allowance (up to £20,000) is set to expire. Yet, which ISAs (individual savings accounts) are available to you, and how should you be leveraging them at this key time?
In this short guide, our Sale-based financial planning team will be summarising some important ISAs for your consideration, and offering some ideas about how they could apply to a financial plan. If you would like to speak with us about your own financial plan, then please contact us here at Suttons IFA via:
T: 0161 969 1703
If you have any cash stored away in regular savings accounts not being put to good use, then consider putting it into a Cash ISA (at least temporarily). Not only does it retain the easy-access of a regular account, but any interest earned on the savings will be tax-free.
If you want to save money towards your child’s future, then there is also the Junior Cash ISA to consider. At the time of writing, it is possible to find some deals with interest rates of up to 3.6%, which exceeds the regular savings accounts of most high street banks. In 2019-20 you can put up to £4,368 into a Cash ISA per tax year, which your child can then access from the age of 18.
Stocks & Shares ISA
If you’re looking to grow your savings over a period of years, and can stomach more investment risk, then a Stocks & Shares ISA could be a good option. This allows you to invest your money in assets such as bonds and equities, which typically offer higher returns than Cash ISAs. The downside you need to consider is that your capital will be subject to investment risk.
The value of your investments could go down or up, and you might get back less than you invested. It is also possible to put your child’s savings into a Junior Stocks & Shares ISA, if you are prepared to shoulder those risks and give these savings more opportunity to grow.
For those wondering how ISAs can be leveraged for retirement purposes, or even for a home purchase, the Lifetime ISA can be a good option. In 2019-20, you can save up to £4,000 per tax year into one and receive a 25% bonus from the government (i.e. up to £1,000). The primary condition is that the money must be used toward a deposit on a first property, or after the age of 60 for retirement purposes.
Innovative Finance ISA
Interested in crowdfunding, peer-to-peer (P2P) lending or other forms of finance? An Innovative Finance ISA allows you to invest in small businesses and similar opportunities in a tax-efficient manner, whilst enjoying tax-free returns. The potential rewards are generally seen to be higher with these investments, but they are also riskier than other assets such as bonds since smaller businesses might fail and lose your money. Be careful to speak with your financial adviser about how an ISA such as this might sit within your wider portfolio, to ensure you are investing in line with your identified risk profile and investment goals.
Help to Buy ISA
This ISA was launched in recent years with the aim of assisting first-time buyers with a deposit. It is no longer available to the wider public since it was abolished in November 2019, and many of the benefits have been replicated in the aforementioned Lifetime ISA. However, people who currently hold one can still contribute up to £200 into it until November 2029.
If you currently hold a Buy To Let ISA, then it might be possible to find a better deal with another provider. A financial adviser can help you survey the full market and check whether you are best staying put, or moving elsewhere. Alternatively, you might want to consider discussing whether you might benefit from moving your savings to a Lifetime ISA instead. Remember, with the Help To Buy ISA you can only save up to £2,400 into one per tax year (after year one), whilst with a Lifetime ISA you are allowed to save up to £4,000 per year. On the other hand, you cannot use your Lifetime ISA savings until you have been saving into it for at least 12 months.
Make sure you take advantage of the small window of opportunity with your ISA(s) before the 5th of April. Remember, you don’t have to pick just one. You can commit up to £20,000 across different types of ISA to leverage their different strengths and benefits. We recommend talking to a qualified financial adviser about how best to use them towards your financial goals.
If you would like to know more about financial planning or wish to discuss your own financial goals and strategy with us, then we’d be delighted to hear from you.
Please get in touch using the details below, to arrange a free, no-commitment financial consultation with a member of our team:
T: 0161 969 1703