The new tax year starts on 6th April each year, meaning you have until midnight on the 5th April to use up your previous year’s ISA allowance, or you’ll lose it forever.
Your annual ISA allowance is like a wrapper you can put around your savings and investments to make them tax-efficient. You get one wrapper per year, which you can use to cover up to £20,000 (since 2017/8) and you can split the wrapper between different pots of money, like cash savings and investments, up to the maximum allowance.
If you currently have savings and investments and you’re not maximising your ISA limit, you might be missing out. ISAs help by protecting your returns from tax, allowing you to keep more of the money you earn.
Once a tax year has passed, you can’t add any more money to that year’s ISA allowance – so if you only save £10k over a given year, you’ll lose the right to the unused portion (£10k) of your annual allowance that year, after 5 April.
That’s why, if you have money you want to save or invest, and you haven’t maximised this year’s ISA allowance yet, it’s important not to miss the ISA deadline at the end of the tax year.
Check the deadline!
You may think that you have until 5 April to sort your ISA, but the REAL deadline could be a lot closer! This is because it can take a few working days for your money to reach your account with some ISA providers, so it’s important to check with them how long it typically takes, and what’s the best way to send it, to give you the best chance of getting everything sorted before that all-important deadline passes.
The tax treatment depends on your individual circumstances and maybe subject to change in the future.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.