Are you wanting to boost your financial health through financial investments? If so, an ISA could be a great option for you. ISA stands for Individual Savings Account and they’re a tax-efficient option for UK residents. Interest and growth earned from all types of ISA investments are free from tax and in this article we’ll discuss the benefits of using ISAs, what the allowances are and what you can do after this has been reached.

The benefits of a Stocks and Shares ISA

Willday Wealth Management are proud to offer Stocks and Shares ISAs as one of our products. This interest is free from UK income tax and will add up over time, enhancing your overall returns. Stocks and Shares ISAs are long-term growth opportunities. Historically, these ISAs have outperformed cash savings when looked at over a long period of time. Of course, there is a risk involved with these investments as with any other type*. However the team at Willday will manage your Stocks and Shares ISA investments to ensure your money is working hard for you. Any required adjustments to your portfolio can be made to give you the highest returns possible.

What are the annual ISA allowances?

As of January 2025, the annual allowance for an ISA is £20,000 per financial year. This can be in one ISA account or split across multiple accounts. If one of your ISA accounts is a Lifetime ISA, the maximum that can be invested here per financial year is £4,000, from the £20,000 total allowance. The annual allowance may not be carried over to the following year so any unused allowance is therefore lost. Should you exceed your annual allowance in ISA investments, interest earned on the excess is subject to tax.

What other options are available?

If you have funds available to invest, but have no ISA allowance remaining for the year, there are other options available. One option would be to invest the money in a high interest savings account. To achieve the highest interest rates, this may require a no-access account for a period of time. Another factor to remember is that interest earned in such an account is subject to tax. If the new tax year is almost here, it may be a more financially efficient option to wait until the new tax year and use the new annual allowance. For Basic Rate tax payers your annual allowance for interest from savings is £1,000, for Higher Rate tax payers it’s £500 and for Additional Rate tax payers it’s £0.

Should you have direct dependents under the age of 18, a Junior ISA may be a suitable option for you. This form of ISA falls outside the £20,000 annual allowance. This means even if you have reached capacity of your ISA, you can still pay into a Junior ISA. These are generally only cash investments and must be started by a child’s parent, however they can be contributed to by anyone including friends and family, up to a total of £9,000 per tax year. The funds are locked away until the child turns 18, making it a great way to save for university, their first home, travelling or any other large expense.

A different tax-efficient option is to invest your funds in a pension. Pension contributions can create additional tax efficiencies and could mean more financial security in your retirement. It’s wise to begin retirement planning by starting a pension as early as possible. The longer you are investing in your pension, the more opportunity there is for your pension pot to grow. So, this option is not only tax-efficient, but wise for future retirement planning too.

How can Willday Wealth Management help?

Our team of experienced advisors would love to help you to navigate Stocks and Shares ISAs*. We will work with you to develop a portfolio that aligns with your savings goals and risk appetite. The team are also able to discuss additional options including pensions and Junior ISAs, should you reach the annual allowance limit on your ISA. Contact our team to arrange a consultation as soon as possible.

* Please note: with investing, your capital is at risk and you may get less than what you invested. Tax treatment depends on your individual circumstances and may change in the future.