Was it fireworks or rabbits in the Spring Budget?

t the end of the 2022-23 tax year, it is important for individuals and families to conduct a financial annual review. An ISA (Individual Savings Account) is a beneficial tool for saving tax on your investments. This article will introduce ISAs and explain how the Lifetime ISA can support you with your housing deposit. 

Who needs an ISA? 

An ISA is a type of personal savings account that is available for UK residents. One significant role of an ISA is that it helps you save on taxes.  

All the benefits generated from investing in an ISA account will not be subject to capital gains tax, dividend tax, or income tax. Additionally, you do not need to declare these benefits in your tax return form. 

If you use a general investment account instead of an ISA, you will need to pay capital gains tax and dividend tax when your investment benefits exceed the allowances. 

For example, if you are a higher taxpayer, you are likely to pay 20% on gains from chargeable assets other than residential property which is taxed at 28%. Please consult professionals for details about your tax situation. 

It is also important to note that since April 2023, the allowance for capital gains tax will be halved from £12,300 to £6,000, which will further decrease to £3,000 in April 2024. 

The allowance for dividend tax will be decreased from £2,000 to £1,000 in April 2023, and then to £500 in April 2024. 

This is why ISAs are so important for people who want to save on taxes.


Mortgage Calculators