Individual Savings Accounts are a great way to save money in a tax-efficient wrapper. There are various kinds of ISAs, from Stocks and Shares ISAs to Lifetime ISAs, and even Junior ISAs designed to help you save money for children under the age of 16. Every year you get an annual allowance that you must use. Any available allowance you don’t maximise is not carried forward so you must use all of your allowance each year.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
With just a few short months left until the end of the tax year and the ISA savings deadline, here are a few frequently asked questions about Individual Savings Accounts.
Q: How many ISAs can I have?
A: The number of ISAs you have isn’t exactly what you should be concerned about. As of the 2022/23 tax year, your total annual allowance is £20,000, which means that the amount of money you save across any and all of your various ISAs must not exceed this limit. You have the freedom to choose how much money you put into each of your different kinds of ISA accounts and the ability to switch up your strategy year to year based on your needs.
Q: Is it possible to consolidate or transfer ISAs?
A: Yes, it’s possible to do both without losing any tax-efficiency. Often, your initial rate might change and other providers have a more attractive rate, or perhaps a particular ISA, like a Stocks & Shares ISA, doesn’t perform as well as you’d hoped. Consolidating ISAs helps save on paperwork and time spent managing multiple ISAs. As long as you don’t violate any terms and conditions of your existing account, you can transfer an ISA at any time.
Q: Do I need to pay tax on ISA dividend income?
A: No, you won’t have to pay any tax on dividends paid inside of your Individual Savings Account.
Q: Do I need to pay tax on any Capital Gains Tax (CGT) profits?
A: No, CGT is not payable on ISA investment gains.
Need help maximising your ISA allowance?
If you’re not sure about the best way to invest your annual ISA allowance, the best thing to do is to seek professional guidance. The experts at Dental & Medical Financial Services will help you allocate your allowance and ensure it works as part of your larger financial plan. Don’t let the deadline sneak up on you — get in contact with us today.