Have you used your ISA allowance this tax year?

Each tax year the maximum annual amount you can save or invest in an Individual Savings Account (ISA) is £15,240. The current tax year runs from 6th April 2016 to 5th April 2017.

ISAs are a highly tax efficient way to save or invest your money because you don’t pay Income Tax on your interest, or Capital Gains Tax on any profits. You can put the whole amount into a Cash ISA or a Stocks & Shares ISA, or you can split the allowance between the two types of ISA. You may also be eligible for a Help to Buy ISA if you are saving to buy your first home.

ISAs are an important part of financial planning as they offer a range of benefits. These include:

• No income tax is payable on interest payments which are made by bond funds.
• No higher rate tax is payable on dividends, which are paid by equity funds (you can’t claim back the 10% dividend tax paid by the fund in an ISA).
• Income from an ISA doesn’t affect your personal allowance or age-related allowance.
• You are not required to pay Capital Gains Tax on any growth you may achieve, so you could use withdrawals to increase your income when necessary (any losses made in the ISA cannot be used to offset gains made elsewhere).

With the tax year end soon approaching on 5th April, it may be worth checking whether you have used your annual ISA allowance yet before you lose it.

Foster Denovo Limited is authorised and regulated by the Financial Conduct Authority. The value of your investment can go down as well as up and you may not get back the full amount invested. The Financial Conduct Authority does not regulate tax advice.