Welcome to the third part of our 7 New Year Money Tips. This time we’re focusing on how you can leave yourself better off by making the most of your annual ISA allowance. With all of their tax advantages and flexibility, ISAs really should be the first stop for anyone who has money to save or invest.
Maximise this year’s allowance
Currently, you can pay up to £20,000 per year into an ISA and not have to pay any tax on it. And that’s the case whether you choose a cash ISA (including a Help to Buy ISA), a Stocks and Shares ISA, Innovative Finance ISA – or a mixture of all of them.
The new tax year starts from April 2021, so it makes sense to put your money in at the start of this period, rather than towards the end. That way, you get growth and the tax-free benefits for a full 12 months, rather than just a few.
Double up if you’re a couple
Remember that the £20,000 limit is just for one person. So couples are able to tuck away £40,000 between them tax-free. Even if one partner has no income at all, a high-earning spouse or civil partner can transfer assets to them – ensuring they’re using the full allowances available.
Keen to get more money tips to help you through 2021? Look out for our next New Year Money Tip showing you how to be credit card smart.
Disclaimer: This article does not constitute financial or other professional advice. You should consult a professional adviser if you require financial advice.