Utilising your ISA allowance before the deadline

Individual Savings Accounts (ISAs)

Written by EKWilliams Team



February 7, 2021

In the 2020 to 2021 tax year, the maximum you can save in ISAs is £20,000

Each tax year, we are given an annual ISA allowance. This can build up quickly, letting you accumulate a substantial tax-efficient gain in the long-term. The ISA limit for 2020/21 is £20,000. The proceeds are shielded from Income Tax, tax on dividends, and Capital Gains Tax. To utilise your ISA allowance you should do so before the deadline at midnight on Monday 5 April 2021.

What is a ISA?

An ISA is a type of savings account that allows you to grow your money in a tax-efficient manner. It’s a simple scheme set up by the government to help savers and investors make their money go further. There are 4 types of ISA:

  • cash ISAs
  • stocks and shares ISAs
  • innovative finance ISAs
  • Lifetime ISAs

You do not pay tax on:

  • interest on cash in an ISA
  • income or capital gains from investments in an ISA

If you complete a tax return, you do not need to declare any ISA interest, income, or capital gains on it.

Putting money into an ISA

Every tax year you can put money into one of each kind of ISA. The tax year runs from 6 April to 5 April. You can save up to £20,000 in one type of account or split the allowance across some or all of the other types. You can only pay £4,000 into your Lifetime ISA in a tax year.

What you can include in your ISAs

Cash ISAs can include:

Stocks and shares ISAs can include:

  • shares in companies
  • unit trusts and investment funds
  • corporate bonds
  • government bonds

You cannot transfer any non-ISA shares you already own into an ISA unless they’re from an employee share scheme.

Lifetime ISAs may include either:

  • cash
  • stocks and shares

Innovative finance ISAs include:

  • peer-to-peer loans – loans that you give to other people or businesses without using a bank
  • ‘crowdfunding debentures’ – investing in a business by buying its debt

You cannot transfer any peer-to-peer loans you’ve already made or crowdfunding debentures you already hold into an innovative finance ISA.

Continue to read the official guidance from HMRC: Individual Savings Accounts (ISAs)

Tax-efficiency is a key consideration when investing because it can make such an enormous difference to your wealth. If you want to understand more about our ISA options please contact a member of the team today on 01942 816 512