Year End Tax Planning Series – Personal Investment Tax

Understanding how best to manage your taxes means having a clear idea of personal investment tax opportunities that will unlock many benefits. In the final instalment of our year-end tax planning series, we will share our insights as to what actions you should be taking now and how best to optimise them throughout the new tax year.

Individual Savings Accounts: Act by 5 April

Individual Savings Accounts (ISAs) are free of income tax and capital gains tax, and do not impact the availability of the Savings or Dividend Allowances. Although ISA limits have not increased this year, the tax benefits continue to be attractive.

There are four types of ISA:

  • cash ISAs
  • stocks and shares ISAs
  • innovative finance ISAs
  • lifetime ISAs.

The lifetime ISA can be used to buy a first home or save for later life. Funds are topped up by the government, which adds a 25% bonus, up to a maximum of £1,000 per year. After the age of 50, no payment into the ISA is allowed, and government top ups cease. Money can be withdrawn to buy a first home, on reaching age 60 or over, or if someone is terminally ill and has less than 12 months to live. In other circumstances, a withdrawal charge of 25% applies.

Rules and Changes

The total that someone can invest in any tax year is set by the government. The limit has not changed for some years: the junior ISA limit is £9,000, and the limit for adults remains £20,000. The overall limit can be allocated across the various types of ISA available.

At present, it is only possible to subscribe to one of each type of ISA each year, but from 6 April 2024, multiple ISAs of the same type will be allowed each year, subject to the overall £20,000 limit. The exception to this is the Lifetime ISA. The limit here is £4,000.

Autumn Statement 2023 also announced some changes to the detail intended to widen the scope of investments permitted within Innovative Finance ISAs. These also take effect from 6 April 2024.

Anyone over the age of 18, who is resident in the UK can open an ISA. In the case of Lifetime ISAs, the applicant must also be under the age of 40. Crown servants and their spouses not living in the UK are also eligible. Junior ISAs are available for children under 18.

Until 6 April 2024, cash ISAs can be opened at the age of 16. From 6 April 2024, this changes, and applicants will have to be 18.

You cannot hold an ISA with anyone else: there is no facility for a joint ISA for spouses. You and your spouse have individual subscription limits, meaning that as a household you can invest a maximum of £40,000. Although you cannot hold an ISA on behalf of someone else, you can open and manage an ISA for someone in vulnerable circumstances, where they lack the mental capacity to do this for themselves. This can be done by applying to the Court of Protection for a financial deputyship order. In Scotland, application is to the Office of the Public Guardian in Scotland.

Tip: Act by 5 April

We recommend taking stock of your position before 5 April 2024. ISA limits can’t be carried forward into future years and are lost if not used in the tax year.

Plan Your Personal Investment Tax Options With Hysons

Do you have any questions that have arisen after taking in this information? We are sure you will do so please do not worry. Simply contact our team to chat about how we can support your personal investment tax for this year and future periods of time.


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