Have you made full use of your tax-free ISA and Pension allowances?

For the 2023/24 tax year, the maximum ISA allowance is £20,000. You can choose to invest your money in one type of ISA account, or you can split the allowance across some or all of the other types available. The tax year runs from 6 April to 5 April and your allowance re-sets at the start of each year, so if not used is lost. You can only pay £4,000 into your Lifetime ISA (LISA)^[1] in a tax year up to the age of 50 and to this the government will add a 25% bonus (you can use a LISA to buy your first home or save for later life, but you must be 18 or over but under 40 to open one), and this leaves £16,000 to contribute to other ISA accounts. Parents and guardians can set up an ISA for their children under the age of 18, then parents and others can invest up to £9,000 (2023/2024) in a Junior ISA for the child and this is in addition to the £20,000 allowance.

There are a number of benefits to investing in an ISA:

• It is a tax efficient way of saving, free of capital gains tax and income tax.
• You have the flexibility of changing your investments as your needs change; so, you can use your ISA to grow your savings, or take an income when you need it.
• There is no fixed term, although you should be prepared to hold on to your investment for at least five years, ideally longer. (There may be some restrictions on particular ISAs such as the Lifetime ISA and Innovative Finance ISA.)

There’s still time to invest up to your annual allowance of £60,000* into a pension this tax year (2023/2024). To make the most of your annual pension allowance you can either contribute personally or from your business. Employer contributions also count towards your limit and if you receive bonuses before the end of the tax year, it may be possible to sacrifice these for an equivalent employer pension contribution. This can be very tax-efficient if you don’t need to take the extra money now, so speak to your employer if this might apply to you.

There are a number of benefits to investing in a pension:

• It is a tax efficient way of saving for your retirement; with income tax, capital gains tax and inheritance tax^ benefits once the investment are held in the pension wrapper.
• You can benefit from tax relief on contributions.
• You can access a wide range of investment options within the pension contracts we recommend.
• You have the flexibility to invest in a portfolio aligned with your appetite for risk.
• Most pension contracts provide a wide range of options when it comes to taking benefits.

*Pension contributions are dependent on your personal circumstances, please speak to your financial adviser as you may also be able to make use of unused allowances from up to the previous three tax years.