Financial guru Holly Mackay of Boring Money proposed some radical advice in one of her latest blogs: “I think every saver has to think of the Treasury like an evil alien force, gathering intel and preparing an invasion. Time to batten down the hatches before the nasty green men in their spaceships come for you!”
Mackay reminds us that we “all have £20,000 per adult and £9,000 per rugrat this tax year to place in an ISA”.
Not everyone has that type of cash lying around. But Mackay’s point may make you dig deeper into what you do have, “Look at any investments you have in a general investment account. Did Aunt Bertha leave you some BP shares? Do you have any old funds you bought directly some years ago? Is there anything in the investment cupboard you could shove into an ISA?”
Sell to buy back
Also worth remembering is if you sell down shares or funds to immediately buy back in an ISA could realise capital gains on any profits so to take this into account; we each have up to £12,300 of capital gains this year we can pocket before tax kicks in.
Stocks and Shares ISAs
Any savings you have and do not need immediate access could be parked into a Stocks and Shares ISA to at least have a better chance of seeing some gains rather than having it just sit in a low-interest savings account.
Bed & ISA
Mackay noted that in recent weeks fixed-fee platform Interactive Investor reported that Bed & ISA instructions in January and February were up 306% year-on-year. And 35% of their transfers are coming from cash ISAs.
Junior ISAs can also be used to build some capital, however, you cannot take out the money in a Junior ISA until your child turns 18 and then it belongs to them. If they expect to go to university the junior ISA fund could be pre-agreed to be used for something life-altering, such as university education, studying abroad, startup capital if they are entrepreneurially-minded, a car or even a deposit towards their first property.
Boosting pension contributions up to £40,000 a year by selling down investments outside any tax shelter and moving the cash into a pension could save you a bundle in tax.
“If you invest on a platform, ask if they can do this ‘Bed and ISA’ or ‘Bed and SIPP’ for you. Annoyingly Hargreaves Lansdown has suspended this service this year. With AJ Bell you have to do it on the phone. Interactive Investor support this online, ” suggests Mackay.