Have you ever heard the phrase ‘ISA season’ and wondered what it was? Read below for an overview of what ISA season is and why it’s an important time for your savings!
What is ISA season?
An ISA is an Individual Savings Account that allows you to deposit up to £20,000 tax-free in the current tax year. The ISA season is traditionally in March and April each year as the new tax-year begins on April 6th.
Why should you use your ISA allowance?
If you want to make your savings work harder for you, then using your ISA allowance might help. Paying into an ISA could be a great way to save or invest tax-efficiently.
With a Stocks and Shares ISA, your money is invested in the stock market, and you don’t have to pay tax on any returns you make! However you must remember that with investing, your capital is at risk, meaning you could get back less than you put in as financial markets fluctuate.
How to make the most of ISA season
How you use your ISA allowance depends on your individual circumstances - do what works for you! You can put everything into one ISA or spread your total allowance between a number of different ISA accounts such as a Stocks & Shares ISA, Cash ISA or Lifetime ISA.
Taking advantage of your ISA allowance at the start of the tax year could help you maximise your returns as it will give your money more time to accrue interest or profits. For example, if you decide to open an ISA account in September rather than in April, you’ve missed out on 5 months of potential returns! By starting early, you could benefit from the power of compounding for longer and this could potentially make a huge difference to growing your wealth in the long-term.
Setting up an ISA may seem like a difficult and confusing task but that’s not the case! If you want to invest in a Stocks and Shares ISA, there are many platforms like Wealth8, that can help you get started in minutes. Simply select from a range of index funds according to your risk level and choose how much you want to invest.
With Wealth8, you can start with as little as £8!
The tax treatment depends on your individual circumstances and may be subject to change in the future. Please remember that your capital is at risk. The value of your investments can go down as well as up, and you could get back less than invested.
This article should not be read as personal financial advice. Individual investors should make their own decisions or seek independent advice.