So, now we’re into February and there’s only two months to go until the end of the tax year on 5th April. Which begs the question “have you used your ISA allowance yet?” and if not, how are you planning to do so?
what is an ISA?
Basically, it’s a tax-free wrapper for either or both of savings or investments. Every year you get an allowance to use up. In 2007-08 you have a combined limit of £7,000 of whuch you can put up to £3,000 into savings – the rest can be placed into investments.
what do I need to do to use my ISA allowance?
Open some accounts and put some money into them. It’s no harder to open an ISA than it is to open any other bank account. It’s easier to open one now than wait until right before the deadline.
Look at your whole financial situation. Have you got any money in savings that can be put into a cash ISA instead? Think about the money you’ve got coming in over the next couple of month, can you use any of that to fund it? Think now about how to get together as much money as possible, ISA allowances are use it or lose it deals.
where should I open one?
If you’re looking for a cash ISA, the current best buy according to moneysavingexpert.com is the Icesave one which pays 6.1% interest, and has a minimum balance of £1000. If you’ve got less to put away, the next best is from Egg, paying 6.05% interest and has a minimum balance of £1.
If you’re looking for a stocks and shares ISA, really you need to have an investment plan and then find the cheapest way of doing what you want from that. Usually, a funds supermarket ISA will have the biggest discount on funds costs, the ones that I’ve heard people using are Fidelity and Hargreaves Lansdown but I’m sure there are others, do your own research.
- basic guide to Stocks and Shares ISAs part 1: all about you
- switching from stakeholder pension to sipp
- additional income: stoozing, or credit card arbitrage