The brand new tax year is just around the corner, and that can only mean one thing – it's the start of your new ISA allowance too!
In the 2014/15 tax year you've got a tax-free allowance of £11,880 – of which £5,940 can be saved as cash – but remember that this rises to a combined £15,000 when the NISA comes into play in July.
Until that point, however, you still want to make the most of your ISA savings, and we've got five things you need to remember so you can do just that…
When it comes to ISAs, the mantra is "use it or lose it" – and if you don't use your full allowance each year you're missing out on tax-free interest. That means you've only got a few days left to use up your 2013/14 allowance, so if you haven't yet done so and have got money that can be saved make sure to open up that ISA ASAP – leave it until Sunday and that cash will be treated as part of your 2014/15 allowance and you'll already be part way towards your limit, so you might as well use up the rest of this year's allowance while you still can. It's all about maximising your pot, because that compound interest can soon add up.
A cash ISA might be the first port of call for a lot of people, but it isn't the only option. Why not invest in a stocks and shares ISA instead? It might come with extra risk but there's the potential for better returns too, and with the rules soon relaxing about transfers between cash and stocks and shares it might be worth giving it a go.
However, you don't want to put all your eggs in one basket. You can only have one active cash ISA and/or one stocks and shares ISA per year (until July when they'll be combined) but that doesn't mean you should stick to one thing, and if you're investing in stocks and shares ISAs you'll want to hold funds rather than a single stock to spread your risk.
This applies whether you're opting for cash or stocks and shares – you always want to do your research. In terms of cash ISAs you'll want to make sure you're getting the best rate possible (check out our best buy tables to find the top picks) while stocks and shares will require a bit of extra homework, such as checking the performance of funds and providers.
If you're opting for cash ISAs, the best rates tend to come if you're willing to lock your money away into a fixed rate version. However, with the new allowance coming in, it might be wise not to fix just yet – you'll want to check whether your preferred ISA will allow you to make further additions in a few months' time, thereby making sure you can take advantage of the new limit.
Compare the best cash ISA rates
Looking tax-efficient investment opportunity for your ISA Allowance? - Compare the best available Stocks and Shares ISAs
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