ISA Deadline Approaching: Have You Used Your Allowance?

With just 11 days left until the end of this tax year (Saturday 5th April 2008), have you used your Individual Savings Account allowance for this year?

From my experience, there will be people reading this who have no idea what an ISA is, there will be those who know what they are, but do not have the money to invest or save in them, and there will be those people who have forgotten to use this year’s allowance so far and risk losing it if they don’t invest soon enough. (There will of course be those smug, organised people who always make sure they use their full ISA allowance each year – this post is probably not the most useful for you).

If you’re in the first group (not sure what an ISA is), then it’s worth knowing that ISAs are a way of either saving or investing in a tax efficient manner, and should really be one of the first things you look at when starting to save or invest. They are simply atax-efficient “wrapper” in which you can invest money in either cash or stocks and shares (most commonly investment funds). If you’re looking to save regularly then I’d seriously recommend looking at cash ISAs in the first instance – there are some good rates available, you can often start investing from as little as £20 per month and of course there are the tax benefits.

From 6th April 2008, you’ll be able to invest up to £7,200 in an ISA, of which up to £3,600 can be in a cash ISA, and the rest (or of course, the whole £7,200) can be invested in stocks & shares. Plonkee has written a 7-part guide to stocks & shares ISAs which you really should read for more information about these investments, but if a cash ISA is more your thing, especially given the volatility of the markets recently, then take a look at the regularly updated best cash ISAs page on MoneySavingExpert.

Although time is running out to take advantage of this year’s allowance, there is still plenty of time to make a choice and invest – many providers will let you open your ISA up until midnight on 5th April. And of course, a whole new allowance is just around the corner.

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