Use It or Lose It
Your annual ISA allowance of £20,000 cannot be carried forward. If you don't use it by 5th April, it's gone forever.
Important
This might sound like pressure, but it's actually an opportunity. Let's explore how to make the most of this valuable tax shelter.
Types of ISA
Cash ISA
Best for: Emergency funds, short-term savings (less than 5 years)
| Feature | Details |
|---|---|
| Current rates | Up to 5% AER |
| Access | Usually instant |
| Risk level | None - capital protected |
| Tax benefit | Interest is tax-free |
Tip
Stocks and Shares ISA
Best for: Long-term goals (5+ years)
| Feature | Details |
|---|---|
| Potential returns | Higher than cash |
| Access | Usually 1-3 business days |
| Risk level | Capital at risk |
| Tax benefit | No CGT or income tax on gains |
Lifetime ISA (if under 40)
Best for: First home purchase or retirement
| Feature | Details |
|---|---|
| Government bonus | 25% top-up |
| Maximum contribution | £4,000 per year |
| Withdrawal rules | First home or after age 60 |
| Early withdrawal penalty | 25% of amount withdrawn |
Did you know?
Strategy: How to Split Your £20,000
There's no one-size-fits-all answer, but here's a framework:
If You Have No Emergency Fund
- •Build 3-6 months' expenses in a Cash ISA first
- •Then consider Stocks and Shares for longer-term goals
Key Point
If You're Under 40 and Saving for a Home
- •Max out your LISA (£4,000) for the 25% bonus
- •Remaining £16,000 in Cash or S&S ISA depending on your timeline
If You're Focused on Retirement
- •Check you're maximising pension contributions first (higher tax relief)
- •Use remaining capacity for S&S ISA for tax-free growth
Don't Forget Last Year's ISA
Many people focus on new contributions but forget about previous years' ISAs.
Important
Taking Action
Here's your ISA season checklist:
- •
Review your current ISAs - Are they paying competitive rates?
- •
Calculate remaining allowance - What have you used this year?
- •
Set up regular contributions - Don't leave it until March
- •
Consider "Bed and ISA" - Transfer taxable investments into your ISA
Tip
Need help deciding? Book an ISA review with your Altor adviser.
