Individual Savings Accounts (ISAs) are tax-efficient savings and investment accounts that offer a range of advantages to individuals who wish to grow their wealth
ISA allowances are an important aspect of managing how you use these accounts.Therefore, a reminder to utilise ISA Allowances is often issued in February or March to coincide with the end of the tax year fast approaching on 5 April. However, it is never too early to contribute for the current tax year 2024/25 as soon as practicable rather than leaving it until February or March of the following year so that the funds are in an income tax-free environment.With interest rates at around 5%, £20,000 in an interest-bearing account could generate £1,000 interest. For a basic rate taxpayer, this is not a problem as the first £1,000 of interest is tax free. However, for those paying 40% tax, only the first £500 is tax free, and for those with income more than £125,140, all interest is taxable at 45%. So potentially, £500 @ 40% = £200 or £1000 @ 45% = £450 is payable. Although this may seem like “small beer” to many, if you repeat this exercise over several years, the tax can soon become a significant number! Please feel free to contact us so we can explain how you can make best use of your ISA allowances.
ISA allowances are an important aspect of managing how you use these accounts.Therefore, a reminder to utilise ISA Allowances is often issued in February or March to coincide with the end of the tax year fast approaching on 5 April. However, it is never too early to contribute for the current tax year 2024/25 as soon as practicable rather than leaving it until February or March of the following year so that the funds are in an income tax-free environment.With interest rates at around 5%, £20,000 in an interest-bearing account could generate £1,000 interest. For a basic rate taxpayer, this is not a problem as the first £1,000 of interest is tax free. However, for those paying 40% tax, only the first £500 is tax free, and for those with income more than £125,140, all interest is taxable at 45%. So potentially, £500 @ 40% = £200 or £1000 @ 45% = £450 is payable. Although this may seem like “small beer” to many, if you repeat this exercise over several years, the tax can soon become a significant number! Please feel free to contact us so we can explain how you can make best use of your ISA allowances.