Personal Finance | 24 March 2023

Why now could be the best time to be ISA ready

ISAs could provide a more tax efficient way to build for your future and now could be a good time to find out what options are available.

April 6 marks the beginning of a new tax year, so, if you haven’t already, now could be a good time to make sure you’ve used your entire £20,000 ISA allowance for 2022/23. Likewise, if you’re putting money into an ISA in the new tax year after April 6, you may want to put in the maximum allowance.


Why now?

An Individual Savings Account (ISA), is a tax efficient wrapper that allows you to save or invest an annual allowance of up to £20,000 tax free for the 2023/24 tax year.

Once you have paid into a Cash ISA or a Stocks and Shares ISA, that money cannot be taxed. By investing in a Stock and Shares ISA as early as possible during the tax year you could give your money the longest possible chance to grow but please be aware investments can go down as well as up and you may get back less than you initially invested.

If you don’t use your ISA allowance within the tax year it’s gone. So, by making the most of the ISA allowance every year, you could build a strong foundation for the future over time.

What are the benefits of an ISA?

There are many potential benefits to an ISA depending on your financial goals and circumstances.

  • Choose which ISA works for you. You may wish to start saving with a Cash ISA or invest with a Stocks and Shares ISA, though please be aware markets can go down as well as up and you may get back less than your original investment with a Stocks and Shares ISA. Note also that you can only pay into one of each type of ISA in a single tax year (e.g. one Cash, one Lifetime, one Stocks and Shares, or one Innovative Finance) and you cannot pay in more than your annual ISA allowance overall.
  • Tax efficiency. You do not have to pay any UK income tax or capital gains tax on any returns your ISA makes over time, be it a Cash ISA or from Stocks and Shares ISA respectively.
  • ISAs over the long-term. By putting the maximum allowance into an ISA each year, you could build up substantial savings over time that are not subject to tax, giving you some flexibility to help plan for retirement and the future goals for you and your family. 

ISAs and retirement

Pensions are a good way to save for your retirement because you can benefit from tax relief at source when adding to a pension – though there are limits on how much you can contribute to your pension in a tax year. ISAs can also have a role to play in retirement planning. You can only save or invest with an ISA from income on which you have already paid tax at source – i.e. from you salary that may have already been subject to income tax.

However, building up a portfolio of ISAs over time might be a good way to complement your pension. This is because you may be subject to tax when you begin to drawdown from your pension.   By contrast, you can withdraw money from a Cash ISA or the proceeds of sale of investments from a Stocks and Shares ISA free of income tax or capital gains tax, potentially leaving your pension to grow intact for longer.


Combining your ISAs

Making the most of your annual ISA allowance by saving with a Cash ISA or investing through a Stock and Shares ISA each tax year may mean you build up fair few ISAs over time.

Our ISA experts say it may be worth considering bringing them together them under one roof. There are many reasons for bringing everything together. At Coutts, your statements are simplified and all with one provider. Also – the average journey for setting up a Coutts ISA is six minutes, so it can be done quickly and easily.


Coutts ISAs

Coutts offers a Cash ISA and a Stocks and Shares ISA, both of which could help with your financial requirements.

You may also wish to speak to Coutts24 or your Private Banker to find out more.


Our deadlines

Please note, our deadline for opening or topping up an ISA via Coutts Invest before the end of the tax year is 8pm on April 5.

For all other ISAs, the deadline is 12pm on 31 March. For Bed and ISA trading via our face-to-face service, currently the last date to instruct Bed and ISA is 3rd April, with funds then moved into ISA on latest 5th April.


The tax treatment of the investment is that applying under current legislation and can change. The availability and value of any tax reliefs will depend on your individual circumstances.

The value of investments, and the income from them, can fall as well as rise and you may not get back what you put in. You should continue to hold cash for your short-term needs.

Eligibility criteria, fees and charges may apply.


More insights