The start of a new tax year is the perfect time to review your finances and a great opportunity to make the most of your new ISA allowance. By getting ahead now, you can give your savings or investments more time for potential growth, while making full use of the tax-free benefits offered by an ISA.
How ISAs Work
Every UK adult aged 18 or over has an annual ISA allowance. For the 2025/26 tax year, this allowance is £20,000 but it’s a “use it or lose it” situation. If you don’t use your allowance by 5 April 2026, you’ve missed your opportunity.
You can spread this allowance across different types of ISAs for example, Cash ISAs and Stocks and Shares ISAs but the combined total can’t exceed £20,000 in a single tax year. For example, if you put £10,000 into a stocks and shares ISA and £10,000 into a Cash ISA, you’ve used up your full allowance for the year.
It’s also important to note that while the HMRC deadline is midnight on 5 April, your ISA provider may set an earlier cut-off date for contributions, so check with them beforehand.
What is a Stocks and Shares ISA?
A Stocks and Shares ISA is a tax-efficient way to invest in the stock market. It allows you to put your money into a range of investments, such as individual shares, funds, investment trusts, and corporate or government bonds, without paying Income Tax or Capital Gains Tax on your returns.
Whether you prefer to take a hands-on approach and pick your own investments or let a professional do it for you, a Stocks and Shares ISA gives you flexibility and control.
And unlike a Cash ISA, which typically offers interest similar to savings accounts, a Stocks and Shares ISA has the potential for greater returns over the long term, although this comes with a higher level of risk. Investing can be rewarding, but it’s not without risks – the value of investments can go down as well as up, and you may get back less than you put in.
Why Start Early?
Time is one of the most powerful tools when it comes to investing. The earlier you start, the more opportunity your money has to grow.
By acting early in the tax year, you also avoid the last-minute rush in April when many people scramble to use up their allowance before the deadline.
Next Steps
Whichever way you decide to invest, it’s always a good idea to speak to a professional. Our experienced Financial Planners can help you choose the right ISA for your goals and guide you through the investment process based on your individual circumstances.
You can book an appointment with someone at our office in Droitwich, Worcestershire, by emailing info@janenewmanfp.co.uk or calling 01905 779193.
‘The information contained within this article is based on our understanding of legislation, whether proposed or in force at the time of writing. Levels, bases and reliefs from taxation may be subject to change.’
‘This is for information only and does not constitute advice.’
‘The value of your investments can go down as well as up, so you could get back less than you invested. Past performance is not a reliable indicator of future performance.’