As the end of the current financial year draws nearer, people with savings are being urged to act fast to make the most of their £20,000 ISA allowance before the deadline on April 5. The exemption is often referred to as a ‘use it or lose it’ allowance - in other words, you cannot carry forward unused allowances from previous tax years.
Saving in an ISA offers some great tax related benefits and many may not realise that using their ISA allowance is more important than ever this year, due to some upcoming changes to tax allowances. Firstly, the tax-free dividend allowance, the amount of dividend income savers can earn each year from stocks and shares before they pay tax on it, will be halved from £2,000 to £1,000 a year from April 6.
This will then be halved again to £500 from April 6,2024 - yet all dividend income is tax-free in an ISA.
