Antonia Medlicott, Founder and Managing Director of financial education specialists, Investing Insiders, has revealed her checklist of five things savers in Portsmouth must do to protect their savings and allowances before the tax year ends on April 5.
Maximise your ISA allowance
Around 22.7 million adults use ISAs, equating to 40% of the nation, and Antonia points out they need to be aware that any unused allowance from the £20,000 limit will not roll over to the next tax year: “If you have spare cash sitting in a low-interest account, moving it into an ISA by April 5 protects it from tax on interest, dividends, and capital gains.”
She continued: “With speculation about this allowance being reduced to £4,000 in the future, if possible, you should boost this again as soon as you can in the new tax year before the allowance changes.”
Move assets to your partner
Antonia reveals a loophole for extra contributions if you legally have a partner: “If you’re married or in a civil partnership, spreading ISA investments between both partners allows you to maximise your combined £40,000 allowance, and even if you can’t both fill this, a few extra pounds will make a significant difference long-term.”
Open or top-up Junior ISAs for children
In addition to the personal allowance for ISAs, each of your children has a further £9,000 allowance for a Junior ISA and this is a great way to build a financial safety net for their future.
Antonia explains how Junior ISAs also teach children the value of money: “Junior ISAs can be a powerful financial educational tool for children. Involve them in the process and let them see their savings and investments grow, which will make them more likely to be sensible with their money when they take control of the account at 18.”
Check State Pension Gaps
Currently, you can top up missing National Insurance years dating back to 2006. However, this will be limited to just the previous six tax years from April 6, and could mean your State Pension entitlement is reduced if gaps aren’t filled in.
Antonia states that this is particularly important as the opportunity may never present itself again: “A relatively small contribution now could have a significant impact when it comes to retirement. Don’t forget that the full state pension provides a guaranteed, inflation-linked income for life.”
She continued: “Not only could topping up be one of the smartest financial moves you make, but it is very simple to do. Check your National Insurance records online and fill any shortfalls with voluntary contributions. If you are a carer, or on a low income, you may be able to boost your record for free by claiming National Insurance credits.”
As inflation erodes cash savings, invest through a stocks & shares ISA
Despite the recent market turmoil, Antonia states that this is fairly common and shouldn’t deter anyone looking to invest with spare money: “Stock market crashes happen more often than many people realise. That’s because unless you check in on your investments every week, you may not even notice the pain of the crash over the long-term. Analysis shows time and time again that investors who are willing to stay in the market for the long run, see rewards.”
She adds: “Historically, the stock market has significantly outperformed cash savings. If you’re sitting on excess cash, consider drip-feeding it into investments for potentially better returns.”
Read more about what to do ahead of the new tax year (https://investinginsiders.co.uk/best-stocks-shares-isa).