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have you used your 2007-08 ISA allowance yet?

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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.

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8 comments for “have you used your 2007-08 ISA allowance yet?”

  1. interactive investor do a good shares ISA, I think it uses the same infrastructure as the halifax one as well (everything looks the same) it offers free trades until june, with no management fees if you use the sharebuilder thing to shcedule you purchases. Great for smaller investors practising pound cost averaging

    Posted by Stuart | February 7, 2008, 5:26 pm
  2. Yup, or at least, on track to (I buy a full mini-cash ISA in April and drip feed my index tracker- which I’ve been glad of in current conditions!).

    Something I’ve been thinking about, though, is that novice investors are encouraged to take out tax-efficient packages (such as ISAs and Child Trust Funds), without really knowing much about the investments that sit inside these wrappers. There was a story in the weekend Grauniad about a mother complaining that her kid’s CTF was only worth as much as had been put into it over 4 years. I strongly suspect it was really just Guardian-style spin to print the piece, particularly without even mentioning that the idea of a shares-based investment works for CTFs because it’s a long term investment, but I’ve known a number people who have lost money who’ve thought me foolhardy for ‘messing’ with ISAs, obvious to the fact it was the investment vehicle and not the wrapper to blame.

    Posted by Pippin | February 8, 2008, 11:53 am
  3. I’ve got my monthly contributions going into my Fidelity FundsNetwork ISA, but I won’t use anywhere near my full allowance this year.

    Don’t forget the allowance is going up next year, and the Maxi and Mini distinctions are disappearing. Hopefully by making them a little simpler to understand more people will start taking them out.

    Posted by Rob Lewis | February 11, 2008, 9:32 pm
  4. Yes, at last the allowance is going up. Not that I’m in a position to use it all anyway, yet.

    People are notoriously lazy when it comes to taking action, myself included, but hopefully making things simpler to understand will help.

    Posted by plonkee | February 12, 2008, 5:29 pm
  5. You might want to check A&L’s ISA - 6.25% until May 2009.

    Posted by Llama for brains | February 12, 2008, 11:15 pm
  6. I have been looking into getting an ISA for my son. There is a lot of information out there but a lot of it is really quite confusing. This helps clarify the issues of tax free allowances for me, so thanks for the article.

    Annuity Rates

    Posted by Tez Art | October 19, 2010, 10:34 am

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