An ISA is an Individual Savings Account and there are four main types: Cash, Stocks & Shares, Lifetime and Innovative Finance ISA’s.
With current market volatility, caused by a variety of issues from COVID and Brexit to the Russian invasion of Ukraine, it is important to make your money work as hard for you as possible.
An ISA could benefit you financially
For the 2021-2022 tax year, you can currently save up to a maximum of £20,000 in your ISA. One of its biggest advantages is that it shields your money from income and capital gains tax. Therefore, you can keep more of your hard-earned money in your own pocket and away from the clutches of the tax man.
It takes just a few minutes to set up an ISA, with many financial institutions offering them. They are quick and easy to top up, meaning it requires minimal effort to keep more of your cash safe from tax.
With the higher rate income tax threshold and the personal allowance set to be frozen until 2026, more people could find themselves being placed in a higher tax bracket. As such, they may find themselves paying more tax on investments held outside of an ISA if their allowances don’t cover their income or gains. By having an ISA, you can shield your capital from tax.
Furthermore, this April sees a scheduled 1.25% increase on dividend tax implemented, meaning an ISA’s advantages could prove even more valuable.
The earlier you start your retirement and tax planning, the better. The more time your money is invested, the longer it has to grow – and the longer it is sheltered from tax means it will be working even harder for you, so you can maximise your income for retirement.
You may find yourself wondering how to invest your ISA, or perhaps you may need some help to start and manage an ISA. You may just need some help to protect your wealth and ensure you pay less tax, so you can keep more of your hard-earned wealth. Reeves Independent can help you with all of those.
The articles are for information only and should not be construed as advice or a recommendation. Please seek independent financial advice before taking any action. No action should be taken without independent professional financial advice as any actions on your pension may be irrevocable and have a big impact on your income in retirement.
