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.
