The primary reason Doctors and Dentists choose to save into an ISA, rather than a regular savings account, is that the interest earned on the investment is completely tax-free. Subsequently, it is tax efficient to invest the maximum you can afford into an ISA, within the allowances given, for the relevant tax year. Find out how you can maximise your benefits BEFORE 5 April 2017!
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it.
The tax year ends on 5 April 2017 – act now to save tax
There are just six weeks left to the end of the tax year, and that means just a short amount of time to take action to minimise your tax.
Read more: Last minute tax saving ideas to minimise your next tax bill
This includes making any final contributions to your ISA so that you can earn tax-free interest income, whilst saving for a new house, new car, dream holiday or your retirement.
To maximise ISA benefits this year, consider topping up your ISA account to meet the annual allowance, which in 16/17 is £15,240.
Because ISA allowances can not be rolled forward, once the tax year end passes, you will have lost the opportunity to invest.
A financial adviser can help with your final contribution and ensure you are maximising your tax position across other investments too.
The benefits of ISAs for Doctors & Dentists
Most Doctors and Dentists will use ISA’s as a savings vehicle, and often also as part of a wider retirement plan.
Although you may also have other investments, seeking larger returns over the long-term, ISA’s offer a flexible investment option, where your money can remain accessible should you need it.
Despite the fall in interest rates, which has also affected ISAs in recent years, these accounts still provide the added benefit of being tax-free, that other accounts do not offer.
Choosing your ISA
- Stocks and Shares ISA’s will, on the whole, pay better returns, however, the risk is higher and your strategy may need to be more longer-term.
- Cash ISA’s are still popular for those with a low capacity for taking risks.
- Spread the risk and potential return, by combing a Stocks ISA with a Cash ISA
- Transfers can be made between your various ISA funds throughout the year, offering flexibility to suit your requirements.
How to maximise your ISA benefits
Maximising your ISA benefits is simple; invest as much as you can afford into the ISA within the tax year.
It is only possible to open one ISA each year, however, it is possible to have multiple ISA’s over your lifetime.
This means you can open up new accounts each tax year to accumulate savings until you want to cash it in, possibly in your retirement.
Key points to making your final contribution
- 16/17 annual tax-free ISA allowance – £15,240
- This is the maximum you can contribute in this tax year
- Take this figure and deduct contributions from 6 April 2016 to date, to calculate your maximum 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
Want to maximise your ISA benefits this year?
Tel: 01403 780 770
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