Act now before the tax year ends to use or lose your ISA allowance

If you haven’t yet taken advantage of your entitlement this tax year (ends 5th April 2011) to a tax free allowance through an Individual Savings Account (ISA) , time is fast running-out.

ISAs are accounts which you hold within a ‘tax wrapper’.This means you do not have to declare any income from them.They are tax free, and you can save cash,or invest in stocks and shares.

There are rules of course. You should seek independent financial advice, but a good start is to go to an official website like for instance direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/SavingsAndInvestments for guidance.

On the direct.gov site , you will see that you can switch money out of a cash ISA into a stocks and shares ISA without losing the tax-free benefit of the ‘wrapper’. So, if you , like me, have been suffering from the low,almost non-existant, interest returns offered by many banks and building societies who are  providers of financial products for ISAs, this option may be for you. But this is not to say this is right for your particular circumstances and, as I said above ,you need to take appropriate financial advice. Using stocks and shares ,as an alternative investment to increase return on investment ,should perhaps only be considered with the caveat that the value of these go up as well as down. It maybe advisable that you chose this option only if you are investing over a minimum period of (say ) 3 to 5 years. Check-out direct.gov now while there is still some time left. Of course, if you miss out this tax year, the allowance has gone for good. You will, however, be able to consider using the allowance for the new tax year from 6th April ( in 2011/2012)

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