ISAs should be the first port of call for anyone looking to maximise their tax efficiency, and least year savers got a welcome boost with the announcement that the annual investment limit was being raised. But do you know what the allowance is? According to research from The Share Centre, many people don't…
The figures show that 46% of those surveyed don't know the current ISA allowance for the 2014/15 tax year, with 30% under-estimating the limit and 16% over-estimating it. This is despite the fact that those surveyed were experienced investors, with each having over £10,000 in investments.
However, despite many not knowing the limits, the appetite for tax-free investment is high, with much of the remainder (34%) planning to invest the full amount into their stocks & shares ISA this year.
The survey also found that investors have clear ideas on what they think the ISA allowance should be, with the majority thinking that the current limit is too low. The figures show that 75% believe that the limit should be higher than it is currently, with 46% thinking the allowance should be as much as the individual wants, on the assumption that they already pay enough tax. Just 21% agreed with the current limit of £15,000, and only 5% thought it should be less.
Graham Spooner, investment research analyst at The Share Centre, said: "The research shows that following the Chancellor's Budget last year, many investors are yet to realise that they can shelter £15,000 from the taxman in an ISA. This is a huge benefit for investors and they need to capitalise on it, especially when our research shows that appetite for a tax-free savings vehicle is very high.
"It is important savers look to make the most of ISA investing in light of the tax benefits. Savvy investors should look to make the most of the tax-free allowance each year and invest before the start of the new tax year on 5 April 2015."
Whether you're fully aware of the limit or not, the fact of the matter remains – you need to make the most of it! ISAs are the only savings vehicle that will keep your investment away from the taxman, with all returns being entirely tax-free.
You can save as much as £15,000 in the current tax year, and with April fast approaching, you'll want to save as much as you can before the new tax year begins! Check out our best buys to find the top cash ISA picks, or if you've got a slightly higher risk appetite, consider stocks & shares ISAs to see if you could benefit even more.
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