April 5th is the end of the tax year for individuals. And while end of tax year considerations are more something that businesses need to think about (and their business end of tax year can be at any time) there is one particular area for individuals where this date is important.
Have you utilized your full ISA allowance for the tax year?
The saying, ‘use it or lose it’ is very apt when it comes to ISAs and tax years. If you want to invest some extra or bring yourself up to the annual maximum investment of £20,000 in an ISA, you need to do it before April 5th. But don’t leave it to the last minute! If you’re thinking about it, then you should probably look to get the wheels in motion in the next week or two.
Currently an individual can pay up to £20k into an ISA each tax year (6th April – 5th April). That’s per person. For a couple that’s £20k each, thus £40k in total.
There are different types of ISAs. We’re a little guarded about cash ISAs though – they don’t generally deliver the best returns. A stocks and shares ISA is more likely, over time – not just something like six months, more like several years – to deliver a better return than a cash ISA. In fact, we’d be extremely disappointed (to put it mildly) if we couldn’t get a client a better medium or long-term return from a stocks and shares ISA versus a cash ISA.
One business-related area that is worth looking at – if you’re a business owner – as the end of the financial year rolls around is whether you’ve utilized your full pension contributions allowance? For example, an employers’ lump sum contribution will offset corporation tax while enhancing employee retirement planning capabilities at the same time. It’s certainly something worth looking at. There are other things to consider for businesses and we’d suggest talking to your accountant as you usually would.
Other than ISAs, there aren’t really many high-ticket, time-critical things to consider towards the end of a financial year for an individual. Lump sum investments into bonds can be done at any time. Pension contributions can be made at any time. ISAs are the key thing. If you’re in a position to get the year’s contribution up to £20,000 it’s well worth serious consideration.
Risk Warning.
The information contained in this article is provided in good faith and is provided for information purposes only.
Whilst every care has been taken in the preparation of the information, no responsibility is accepted for any errors which, despite our precautions, it may contain.
No individual investment advice is given, nor intended to be given, in this article and no liability will be accepted in respect of any action you may take as a result of reading this material.
If you are unsure whether any particular investment or any specific course of action may be suitable for you, you are urged to take independent investment advice.
