What is a good way to 
use my ISA allowance?

6th July 2017 by Nigel Farrar

What is a good way to 
use my ISA allowance?

Are you desperately trying to save for your first home or, are you at the other end of the spectrum, saving so that you don’t have to work to an age when your faculties have started to go downhill fast?
Many doctors are doing exactly that, yet current interest rates and pension legislation are making the reality of achieving either harder than disentangling a box of string guarded by a fun-loving kitten!
Are the upcoming ISA changes going to come to your rescue?

1. Your much higher ISA allowance

The first bit of good news is that the 2017/18 ISA allowance is now £20,000 – that’s over 30% higher than the previous £15,240 ISA allowance! It’s the biggest hike in years and timely.
It means that, this tax year (2017/18), you can either save £4,760 more into an ISA or move other investments into this tax efficient environment.

2. The new Lifetime ISA launches

On the 6th April 2017, the much talked about Lifetime ISA (LISA) was launched. Whilst it is specifically aimed at helping young people simultaneously save for both their first home and their retirement (instead of having to choose one over the other), the LISA also offers tax savings that will benefit the not-so-young.

  • You must be between 18-40 to be eligible to open a LISA;
  • You can save up to a maximum of £4,000 each tax year;
  • The Government will add a 25% bonus to your annual LISA savings, up to age 50;
  • You can continue to contribute to a LISA beyond age 50 but these contributions will not be eligible for the 25% bonus;
  • You can contribute to one LISA in each tax year, as well as a cash ISA, a stocks and shares ISA, and an Innovative Finance ISA; your higher £20,000 2017/18
  • ISA allowance encompasses all your ISA savings.

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