In the wake of the Autumn Budget, it is natural for many to begin rethinking their approach to money.
While cash ISAs have historically been a good avenue for tax-efficient savings, upcoming changes may limit the scope of their effectiveness.
It is important to understand what is changing with ISAs and how it may affect your saving plans.
What is changing with ISAs?
From 6 April 2027, the annual ISA cash limit is dropping to £12,000.
This is only for those under 65, as the limit remains at £20,000 for savers over the age of 65.
The overall annual ISA limit of £20,000 is staying in place, and this could signal a change in how money is invested.
The intention is that the remaining £8,000 of the allowance is invested in a stocks and shares ISA if you still want to benefit from the full tax-free amount.
Are ISAs still a tax-efficient way to save money?
For the most part, ISAs continue to offer a tax-efficient way of investing funds, but their power will be decreasing soon.
As such, it will be wise to make sure that you have fully utilised the £20,000 limit across both this current tax year and the next.
Any money invested now will not be impacted by the changes, so it is best to make the most of the higher limit while it still exists.
Following that, it will be necessary to seek professional support when determining the stocks and shares ISA in which you plan to invest.
Smart saving will require at least one cash ISA and one stocks and shares ISA going forward, so taking the time to learn about them now can result in you being ready when the new limit takes effect.
We can discuss your options with you and help you find the savings strategy that is right for you.
Keep your savings tax-efficient by speaking to our team today!
