Putting money into an ISA is one of the best ways to put it out of the taxman’s reach, especially if you’re a higher rate tax payer. Let the financial experts at Sutherland Independent advise you on your ISA allowances
It only happens once a year.
No not Christmas or Easter, but the ISA deadline.
Perhaps a little less exciting than presents and chocolate, but it’s an important part of financial planning none the less.
Once invested in an ISA, that money is protected from Income Tax and Capital Gains Tax on the investment returns, and you don’t pay any tax on money withdrawn from your ISA.
But unfortunately, you can’t carry your ISA allowance over to the next tax year, so you only have until midnight on Saturday 5 April to ‘use it or lose it’.
The annual subscription limit for the 2018-19 tax year end is £20,000
This subscription limit will remain the same for 2019-20, so if you’re in a couple, you can maximise your respective ISA subscription limits and invest up to £80,000 between you across the 2018-19 and 2019-20 tax years.
Alternatively, you might want to consider a Junior ISA.
Junior ISAs are a tax-efficient way of building up a nest egg for your children or grandchildren. They allow you to provide them with a tax-free lump sum when they reach 18, when the ISA automatically becomes an adult cash ISA.
The maximum amount you can invest in a Junior ISA for 2018/19 is £4,260
Other key considerations around this time of year include mitigating Corporation Tax.
This is the company equivalent of Income Tax for registered companies, and is based on how much profit your business makes.
Pension payments made through your limited company attract Corporation Tax relief and is one of the few remaining ways in which you can withdraw funds from the business, tax efficiently.
We can help you use pension contributions to mitigate your corporation tax bill ensuring that you don’t miss the deadline for your business.
To take advantage of your ISA allowance or speak to us about mitigating Corporation Tax, please contact us today.
Of course, past performance is no guarantee of future returns, and the value of your investment can go down as well as up.
Savings can grow but depending on market conditions, you may not realise the initial sum invested.
There is no guarantee that you will get more out of your investment than you have paid in.