It’s Tuesday! Let’s talk Tax!
Read this week’s short tax snippet for Doctors & Dentists, to help you save money and get more organised with your tax affairs. It’s just to give you a flavour – take 5 minutes to have a read.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice.
Your ISA 16/17 – just days left to take action
Many doctors and dentists save into an ISA, either just as a tax efficient way to manage your money, or as a structured savings plan for retirement.
The tax year is almost coming to a close so there are only really a few days now to take action if you want to maximise to use of your ISA.
Here are 3 reasons why you should maximise your ISA contribution THIS WEEK.
(1) Income earned from ISA interest is tax-free
The interest income that you earn from money saved into regular savings accounts is taxable, compared to ISA interest income, which is tax-free. This is why saving into an ISA is a tax-efficient way to maximise your money.
(2) The tax-free ISA allowance for 16/17 is £15,240 and it doesn’t get rolled forward
Each year there is a tax free allowance for ISA savings, for 16/17 it is £15,240. If you choose to, you can save more than this limit, but the interest would be taxable.
The tax-free limit only applies to the year in question though; it is not possible to roll it forward into the next tax year. Therefore, from 5 April 2017, any unused allowances are lost.
Of course, there is a new tax-free allowance for 17/18 tax year, but if you are making structured savings with an aim to maximise the amount of income you retain each year, then it is always wise to maximise your ISA contribution up to the allowance, or as much as you can afford.
(3) ISAs are a flexible way to save
ISA’s used to be quite rigid in accessing the funds once they were invested.
However, these days ISA’s are virtually as accessible as a regular bank account. This is what makes them so attractive.
It is only possible to open one new ISA per year, but you can have as many ISA’s over your lifetime as you like. Transferring money between ISA’s is easy and also converting from a Stocks & Shares ISA to a Cash ISA and vice versa, is also possible.
This is why many Doctors and Dentists choose to invest, knowing that they will be able to change their path along the way if they need to withdraw money for any reason.
Key points to making your final contribution
- It takes time to process payments so don’t leave it until the last minute
- If using Dental & Medical Financial Services
- Cheques need to be received by 28 March
- Online payments need to be received by 3 April
- If using Dental & Medical Financial Services
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