Increase in ISA Limits

The beginning of the new financial year on 6 April means more to many investors than 1 January, as it represents the perfect time to open new investment accounts and make the most of tax-free earnings.



If you open an ISA or other type of investment account before April, you may only have a limited time to make the most of its annual tax-free benefits, as these cannot typically be carried over to the next financial year. However, if you're on the ball and open your new account as soon after 6 April as possible, you should find it much easier to reach your totals before the New Year comes around again.



One such example is a stocks and shares ISA, which allows up to £10,200 (going up to £10,680 in 2011/12) to be invested free from income tax or capital gains tax. Considering that most investors would typically pay between 20 and 40 per cent of those earnings straight to the revenue, it's clear that investing wisely can really pay.



Cash ISAs are another popular way of saving and making money, particularly due to their flexibility which makes them a winner in uncertain economic times. You still won't have to pay any income tax on your cash ISA earnings, making them a preferable option to many other types of investments, and the interest rate of ISAs similarly tends to be much higher, guaranteeing a higher yield for long-term investors.

If you're feeling the effects of the recession, you may not have considered savings to be a realistic option, but ISAs can sometimes be opened with a relatively small payment, which you can watch grow over a number of years or until you need it most. If you're unsatisfied with the level of interest you're earning from your bank savings account and don't want to deal with the hassle of tax forms at the end of the financial year, ISAs could be the ideal option, and are also relatively low risk.



You may only be able to open one cash or stocks and shares ISA per year however, making it important to choose the right provider that offers the best rate of return on your investment. Consulting with a financial adviser could be the best way to receive impartial advice on the best investment and savings option for you - but generally speaking, ISAs offer greater rewards for much lower risk than other stocks and shares options.



The author of this article is a part of a digital blogging team who work with brands like Standardlife. The content contained in this article is for information purposes only and should not be used to make any financial decisions.