ISA’s

An ISA year runs from the 6th of April to the 5th of April the following year, meaning we are coming to the end of the 2022/2023 ISA year and there are just days left to utilise valuable savings options.
Why you might want an ISA?
Income tax is not just levied on your earnings – it is also due on income from certain types of bonds and any interest you make from savings above the personal savings allowance. This is £1,000 for basic rate taxpayers, £500 for higher earners, and £0 for additional rate taxpayers.
Over the last seven years these personal savings allowances have made saving into an ISA almost irrelevant for anyone except people paying the top rate of tax. But as savings interest rates have climbed over the last year to as high as 4% with some financial institutions, ISA accounts have become an attractive option again, as it means if you have over £25,000 in savings account not in an ISA earning 4% then you would be earning over the £1,000 allowance and will have to pay tax on your savings.
If you have seen your salary increase as some employees have, this also increases the risk that more savers will face an unexpected tax bill this year. If a saver earned £48,269 in the previous tax year, and received interest of £2,000, they would pay tax on £1,000 of savings – resulting in a bill of £200.
But if they then got a 6.7% pay rise, they would cross over into the higher-rate bracket, so the same interest would mean 40% tax on £1,500 of savings, landing you with a £600 tax bill. However, there would be nothing to pay if you had moved your savings into an ISA.

So, what are ISA’s?
ISAs are Individual Savings accounts, which by their very nature are savings accounts that you can save into in your own name only (no Joint accounts). There are various types of ISA and reasons to save into each of them in this manner: –
Cash ISA– You can invest up to £20,000 this tax year 2022/23, and this is set to remain as we move into the new tax year 2023/24. These are very similar to any standard savings account that you may already have but any of the interest earned with the ISA is tax free so does not use any part of your annual savings allowance, you can find instant access versions with variable rates or ones where you can lock them away for a period of time with a fixed rate.
Stocks & Shares ISA– Like a cash ISA, you can invest up to £20,000 this tax year 2022/23, and like the cash ISA this is set to remain as we move into the new tax year 2023/24. Clients invest into a Stocks and shares ISA to gain the potential for growth/income above that which may be available in comparison to a Cash ISA and deposit account, you do have to consider the risks that are involved to gain that potential advantage before investing in a Stocks and shares ISA.
We believe that Investing should be viewed as a longer-term commitment of a minimum of five years, as this allows your money the chance to fully benefit from the ups and downs of the market and the opportunity for your funds to really work for you.
If you are a trying to work out how to save for your future or are considering becoming an investor for the first time you may be daunted by taking a step into the unknown, especially if you have heard about the potential risks involved.
At Blackthorn Financial Services Ltd we understand how to invest, where to invest and can support you on your journey, helping you to achieve the goals for your future, and trying to avoid the mistakes and pitfalls you may make if you attempt to do this by yourself.
Junior ISA– You can put up to £9,000 into a Junior ISA each year. A junior ISA is a tax efficient savings or investment wrapper aimed at encouraging families to save for their children’s futures. Any money you put in a Junior ISA will be locked away until your child’s 18th birthday, when it becomes their money (and will become a standard ISA). This can be invested as in the form of a Junior Cash ISA or a Junior Stocks and Shares ISA. If you have a Child Trust Fund (available for children born between 1st September 2002 and 3rd January 2011) you may be able to transfer this into a Junior ISA.
Lifetime ISA– The Lifetime ISA was launched in 2017. Savers must be aged between 18 to 39 to open an account and limits are capped at £4,000 a year, much lower than the £20,000 annual ISA allowance. Savers can deposit up to £4,000 a year into a “LISA” and they will receive a 25% bonus, worth up to £1,000 a year. This is an effective tax break of 25% and is most beneficial for basic-rate and non-taxpayers. The funds can be used to purchase a first home or utilised towards retirement but for all other uses the funds, access would have a penalty applied.
Asking the experts
Our experts design an individual strategy that is right for you, based upon the information you give us during our discussions with you, along with our up-to-date market knowledge to ensure the strategy put in place is the best one, to help you achieve your goals.
To find out more, please contact us.
The value of pensions and investments can fall as well as rise and you may get back less than you invested.