Avoid these ISA pitfalls in March 2014

‘ISA season’ is officially here as we enter the last full month of the 2013/14 tax year.

Across the UK, savers and investors are being encouraged to maximise their tax-efficient Individual Savings Account (ISA) allowances.

Yesterday in The Guardian I was quoted in an article designed to help readers avoid some of the most common ISA pitfalls.

Along with other advisers, I pointed out the risk of investing more than the maximum permitted ISA allowance.

For the current tax year, this is an overall limit of £11,520 of which up to half (£5,760) can be allocated to a cash ISA and the balance invested in a stocks and shares ISA.

This means that your stocks and shares ISA allowance is effectively based on the £11,520 limit less any amount saved in a cash ISA during the tax year, so an amount ranging from £5,760 to £11,520.

Another common mistake we occasionally see with ISAs is investors failing to follow the correct transfer process, losing the tax-efficient nature of their ISAs in the process.

Transfer, don’t sell, is the rule if you want to keep your savings and investments tax-free.

With the end of the tax year rapidly approaching, take care if you are leaving things to the last minute and do not rush into an ISA pitfall.

Do get in touch if you have any questions about your existing ISA portfolios or making new investments before the end of this tax year.

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