Each tax year, we are each given an annual Individual Savings Account (ISA) allowance. The deadline to add to the account is midnight, Thursday 5 April 2018 and it’s a ‘use it or lose it’ allowance. If you don’t use all or part of it in one tax year, you cannot carry that allowance over to the next year.

The ISA limit for 2017/18 is £20,000 which is remaining the same for 2018/19.

Tax Efficient Savings – Income and growth within an ISA are completely tax free. Any withdrawals from the ISA are also tax free.

Support Your Retirement Plans or Future Objectives – Building up an ISA portfolio can be a very effective addition to your future retirement pot, or to provide a sum of money to support other future financial plans. To support other retirement income, regular withdrawals can be made from ISA’s to provide additional income tax free.

Types of ISAs and allowances

Cash ISA – Anyone over the age of 16 can put their cash savings into a Cash ISA. Accounts can be either instant access, have notice periods or have fixed terms.

Stocks & Shares ISA – Anyone over the age of 18 can put individual shares or managed funds into a Stocks & Shares ISA.

Innovative Finance ISA – This ISA is for investments in peer-to-peer lending platforms. You must be over the age of 18 to invest.

Help to Buy ISA – To help first-time buyers over the age of 18 get on the property ladder. You can start with a lump sum deposit of up to £1,200, then save up to £200 a month. For every £200 you save, the Government will add 25% up to a maximum bonus of £3,000. It’s available per buyer, not household, so if you are saving with a partner, the bonus potential is up to £6,000 towards your house deposit.

Lifetime ISA – Designed for your first home or retirement, it allows you to save up to £4,000 annually to receive a 25% government bonus. You are only allowed to invest into a LISA between the age of 18-39. You must buy a home for £450,000 or less, or to withdraw the cash for retirement you must be 60 plus.

Junior ISA – Cash or investments can be wrapped in this ISA on behalf of children under the age of 18. The Junior ISA has an annual allowance of £4,128 increasing to £4,260 in 2018/19.

ISAs are becoming an integral part of financial planning. However, it is important to remember that an ISA is just a way of sheltering your money from tax. It’s not an investment in its own right although they offer a unique range of benefits.

Whatever your age or personal situation, it is vital to consider your saving strategy as early as possible, and reassess regularly on an ongoing basis. Any savings plan needs to be specific to personal circumstances and objectives, and needs linking to all aspects of your personal finances.

At Clarke Nicklin Financial Planning, we will always assess each clients’ circumstances in detail to arrive at a savings strategy that meets personal objectives. For every client, we will review and revise this with you on an ongoing basis as circumstances and objectives evolve due to your personal and family circumstances changing.

If you wish to discuss this further with one of our advisors please do not hesitate to call Kath Arnold on 0161 495 4700 or email kathrynarnold@cnfp.co.uk.

Important information

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.

The value of investments and income from them may go down. You may not get back the original amount invested.

Past performance is not a reliable indicator of future performance.