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‘The time is now’: Five things you need to know this ISA season as tax deadline looms

Originally published in The Daily Express by Katie Elliott, 24 February 2023.

An investment expert has shared the “true benefits” of ISAs and how to maximise them before the personal tax-free allowance expires in April.

With the countdown to the new financial year now on, ISA season is in full swing. However, the tax-free allowance does not roll over into the next tax year, so it’s a case of “use it or lose it”, experts from CapitalRise have warned. Against the backdrop of soaring living costs and economic uncertainty, making the most of ISA benefits and getting the best return is now more important than ever.

Individual Savings Accounts (ISAs) offer savers a particularly lucrative route to invest their cash, as these accounts currently allow up to £20,000 to be deposited per year, without having to pay tax on the interest above the Personal Savings Allowance (PSA).

However, the deadline to use up 2022/23’s ISA allowance hits on April 5, making now a good time for people to get clued up on the ways they may be able to take advantage of the offer.

Uma Rajah, CEO and co-founder of CapitalRise, said: “The time is now for everybody to get their investments in order, as we are just a few short weeks away from the start of the new tax year. Make sure you are making the most out of your current £20,000 annual tax-free allowance by looking into all the ISA options available to ensure you are still saving or investing at a competitive rate.

“It is important that the public is aware of the true benefits of ISAs, as well as how they work. This is essential at this time of rising costs and high inflation, to ensure your money is working as hard for you as it can be.”

Get to know the four ISA types, particularly the Innovative Finance ISA

There are four different types of ISAs – Cash ISAs, Stocks and Shares ISAs, Lifetime ISAs, and Innovative Finance ISAs (IFISAs).

According to interactive investor, Cash ISAs and Stocks and Shares ISAs are the two most common types of ISA that people invest in.

Cash ISAs only accumulate interest on cash savings and are particularly suitable for the short-term, while with Stocks and Shares ISAs, money is invested and fluctuates depending on how well a person’s chosen investments perform and typically work better for long-term saving.

Lifetime ISAs are intended for those hoping to save for their first home or retirement, and the Government adds a 25 percent bonus of what’s been paid into it every year, up to a maximum of £1,000 a year.

However, experts at CapitalRise noted: “One type worth considering is the IFISA. Introduced in 2016, the IFISA is a tax wrapper for money invested in certain alternative investments.

“With the CapitalRise IFISA, funds may be invested in a loan to a developer, for example, who is looking to fund new prime property projects in areas such as Mayfair or Chelsea.”

However, CapitalRise experts continued: “It is important that you research each of these, so you understand which type best suits your personal needs.”

Maximise your personal tax allowance

ISAs provide a personal tax-free allowance of up to £20,000 per tax year, which can be split between different ISA types or put all into one.

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