Tuesday 6 April marked the beginning of the 2021/2022 UK tax year, which means it’s time to take advantage of your new £20,000 ISA allowance. Here at the Marsden, we understand the importance of saving, in fact, we’ve been supporting our members with their savings goals since 1860!
What is an ISA?
An Individual Savings Account (ISA) is a type of savings account which allows you to invest each tax year up to the annual ISA allowance without incurring any tax on the interest that you receive. There are four different types of ISAs* which include Cash ISAs, Stocks and Shares ISAs, Lifetime ISAs and Innovative Finance ISAs. Junior ISAs are also available for children under 18. You can only pay into one of each type of ISA in each tax year.
What is an ISA allowance?
The ISA allowance is set by the Government for each tax year, which runs from 6 April to 5 April. Your ISA allowance can be split across the different types of ISAs. This means you could save into a Cash ISA, Stocks and Shares ISA, Lifetime ISA and Innovative Finance ISA (subject to account limits†), or you could choose to use your full allowance in a Cash ISA, Stocks and Shares ISA or an Innovative Finance ISA. It’s important to note that the Lifetime ISA and Junior ISA are subject to separate limits that are lower than the overall ISA allowance.
We’ve prepared some top tips below to help you make the most of your new ISA allowance.
Getting your ISA savings off to a good start if you’re a new saver
Establish your savings goals
The first step when it comes to saving is to write down your goals. You may be saving up for your first home, or for retirement; whatever the reason, breaking your goals into small, achievable targets can help. With a plan in place, you can start budgeting, which allows you to set aside some money each month to save into your ISA, whilst the rest is spent on essentials and things you want.
Cut down your outgoings
If you’re eager to reach your ISA saving goals, it may be time to review your outgoings. Sometimes people forget about the gym membership they’re signed up to, or the TV subscription service that went over its free trial date. ‘Clean up’ your outgoings by cancelling any subscriptions that are not in use.
Alternatively, you could look at what your essential bills are costing you. You may not be getting the best price or deal on your phone contract or electricity bill and shopping around could help save money that you could save into your ISA.
Focus on the long-term
Once the new tax year starts, a new ISA allowance will be set, and any unused allowance from the previous year will go to waste. Make the most of your ISA allowance by making sure you’re on track throughout the year by working towards your goals and taking opportunities where possible to reduce spending elsewhere.
Making the most of your tax-free allowance if you’re an existing saver
If you already have an ISA for your hard-earned savings, you may be wondering what your options are when it comes to ISA transfers. An ISA transfer allows you to move money saved in one ISA account to another^. It can be transferred either to the same type, or to a different type of ISA subject to the separate limits on overall investments that apply to Lifetime and Junior ISA accounts.
Previous years’ savings you transfer won’t count towards your current annual allowance. However, if you want to transfer money that has been saved in an ISA during the current year, you will need to transfer all of the current year’s subscriptions to avoid breaching the rule on only paying into one of each type of ISA in each tax year.
How can the Marsden help?
Our friendly branch teams are always on hand to discuss your options and help find the account that’s right for you. Our full range of savings products can be opened remotely, or through one of our eight branches across Lancashire by appointment only.
If you’d like to learn more about our range of ISAs, please visit our ‘ISA’ page, or if you’d like to arrange a telephone appointment with your local branch, you can find their details on our ‘Find a branch’ page.
*Marsden Building Society only offer Cash ISAs as part of its savings range.
^Transfer fees may apply from the provider, and Lifetime ISAs are subject to a 25% Government charge.