Any UK saver beneath threshold urged to consider tax-free account | Personal Finance | Finance
Savers have been encouraged to look at one type of account to increase their savings. The government recently announced new restrictions on how much money you can deposit into certain accounts.
Now is the time to review your savings portfolio and consider what your long-term financial goals are, as the rules will soon be changing. One popular option is ISAs because interest earnings or investment growth on these accounts are tax-free.
You can pay up to £20,000 a year into these accounts, but these rules vary. From April 2027 you will only be able to pay up to £12,000 of this allowance into cash accounts. The remaining £8,000 can only be invested in stocks and shares accounts.
These new rules will not apply to people aged 65 and over, who will retain the current benefit. CEO of Wander Rutgers, UK investment platform lightyearHe said ISAs were a good choice for people looking to increase their savings.
He said: “For most investors investing or saving less than £20,000 a year, it makes sense to have all that money in some form of ISA rather than a GIA (General investment account) or regular account.” This should be kept in mind when the allowance is reset, he explained.
Mr Rutgers urged: “Your limit resets on April 6, so if you haven’t already, put whatever you can into your ISA to take advantage of this year’s allowance.” The savings expert said the most important factor in investing is to stay consistent with your deposits and give your assets the time they need to grow.
key factor
He said: “The biggest factor in long-term investing success isn’t picking the right moment or the right stock, it’s how early you start and how regularly you invest. “To put this in real terms, someone investing £100 a month for 30 years could make around £100,000 over time.
“Just wait ten years to get started and that figure could be as low as £45,000, even if you’re investing the same amount each month. “The difference isn’t about skill, it’s about time.
“The sooner investing becomes a routine part of life, the more powerful it becomes. The most effective approach is simple: Decide what you want to invest in, spread your money across a variety of investments, and contribute automatically each month so you don’t constantly second-guess yourself.”
See the full range
The team at ISA provider Moneybox have also shared some thoughts on how best to grow your ISA savings. Brian Byrnes, personal finance director, said: “It is important to consider the full range of ISA offers as some may be better suited to certain objectives.
“For example, a Cash ISA is great for building your emergency fund or short-term savings and can be an enabler for long-term investing, giving ordinary savers the peace of mind and financial flexibility needed to invest with confidence.
“A Stocks and Shares ISA is ideal for anyone with a solid savings buffer looking to build long-term wealth, and a Lifetime ISA (LISA) can be used to help you buy your first home or save for retirement.”
Mr Byrnes said it was good to look at comparison websites such as MoneySavingExpert as they regularly updated their tables with the best rates available.
