Make the most of your ISA allowance

This year’s ISA allowance remains at £20,000 per person. If you have not yet used your Individual Savings Account (ISA) allowance for this tax year and intend to do so, please remember that this must be done before 5th April 2025.

While it is not necessary to contribute the full allowance each year, the more you can invest, the greater the potential benefit. You can make contributions on an ad-hoc basis or set up monthly payments. By consistently contributing to your ISA and holding those investments for several years or even decades, you could accumulate a substantial amount of tax-free wealth.

You can make withdrawals from your Stocks and Shares ISA whenever you need to, without incurring Income Tax or Capital Gains Tax. Some ISA providers (including BRI) can also run a flexible ISA, which means you can withdraw funds from your Stocks and Shares ISA and replace it within the same tax year without affecting your current or previous year’s allowances.

A common misconception is that you can only open and contribute to one ISA each tax year. In fact, you can pay into different types of ISAs, including Stocks and Shares ISAs and Cash ISAs, within the same tax year. The confusion arises from the previous rule that allowed contributions to only one of each type of ISA per tax year. The key point to remember is to monitor your contributions to multiple ISAs carefully to avoid exceeding the annual limit.

Finally, transferring ISAs from previous tax years does not affect your current ISA allowance. Consolidating ISAs can make them easier to manage and provide better oversight. In recent years, cash ISAs have offered good returns as interest rates rose sharply. However, expectations are that rates will fall in the coming months and years, so we would expect those returns to reduce.

If you have any questions about ISAs or would like to arrange a contribution, please contact your advisor who will be happy to assist you.

BRI Wealth Management plc is authorised and regulated by the Financial Conduct Authority. The price and value of investments and the income, if any, from them can fall as well as rise. Past performance of investments is not necessarily a guide to future performance. Changes in rates of exchange may adversely affect the value of non-UK shares.