Why Using Up Your Stocks & Shares ISA Allowance Still Makes Sense
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
As we approach the end of the 2019/20 tax year, investors shouldn’t be distracted from their long-term goals. Amid current changes, there are constants, and one of the things that hasn’t changed is the need to prepare for the future. Investing as much of your annual allowance into your ISA makes sense, as this is tax efficient and gives your money the opportunity for long term growth.
As an investor, when you set up your Stocks & Shares ISA, you had a goal and timeframe in mind. Typically, a Stocks & Shares ISA should be invested for at least five years, to ride out fluctuations in the markets. With this in mind, nothing has really changed for Stocks & Shares ISA investors. Yes, there will be periods of volatility, but the longer you invest for, the more opportunities you have for growth.
You can invest up to £20,000 in the current tax year, but you’ll lose this allowance at midnight on April 5, it can’t be rolled over into the 2020/21 tax year.
By investing now, you can start topping up again with a clean slate in the new tax year beginning on April 6th. This is tax efficient, all growth within your Stocks & Shares ISA will not be subject to Capital Gains Tax or Income Tax.
When it comes to your allowance, if you don’t use it, you lose it. You’d only be able to invest £20,000 again next tax year, so if you envision being able to invest more than that, you’d have to invest the additional before the new tax year starts next week presuming you have some allowance remaining for this tax year. Otherwise that money may end up stuck in a non-tax efficient account.
A Stocks & Shares ISA is a long-term investment, remember your goal, stay disciplined, and keep investing towards what you want to achieve. Using up the allowance in your tax efficient Stocks & Shares ISA really can help you do more with your money.