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WHY IT PAYS TO USE YOUR 2022/23 ISA ALLOWANCE RIGHT NOW
The 2022/23 tax year has only just started, but you should already start thinking about how you’ll use your allowances over the next 12 months. It can help maximise your assets. In the 2022/23 tax year you can deposit up to £20,000 into ISAs. If you don’t use this allowance before the end of the tax year, you lose it. You can save or invest tax-efficiently through an ISA, so making full use of your allowance can help your money go further. If you left using your 2021/22 ISA allowance until the deadline was near, don’t let your ISA slip your mind now. Drip-feeding your deposits can make your ISA goal part of your budget: If you want to maximise your ISA allowance or have a goal for how much you want to put in, making regular deposits a part of your budget can help. Depositing £1,666 into your ISA each month can be more manageable than adding a lump sum at the end of the tax year. If you don’t have a lump sum to add to your ISA, breaking down your end goal can make sense. In addition to making deposits more manageable, drip-feeding your money can be useful if you’ll be investing through an ISA. Investment markets will rise and fall throughout the year. So, by spreading out deposits, you’ll be buying at different points throughout the market cycle. It’s an approach that can remove the temptation to try and time the markets. Depositing a lump sum now means you have longer to earn interest or returns If you already have a lump sum available to deposit, doing so now means you could have an extra 12
months of interest or returns than you would if you waited until April 2023. If you’ll be saving through a Cash ISA, the extra interest added to your account over the year can really add up. Adding a lump sum if you’ll be using a Stocks and Shares ISA to invest means you can potentially benefit from an additional 12 months of investment returns. The graph below shows how investing £5,000 each tax year delivers different returns if you invested on the first working day of the tax year compared to the last working day. £200,000 £150,000 £100,000 £50,000 £0 2000 2002 2004 2006 2008 2010 Source: Hargreaves Lansdown
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2016 2018 2020 First day Last day
While both options have done well and returned over 99% growth, you would be better off by investing at the start of the tax year overall. However, you should keep in mind that investment performance cannot be guaranteed.
Please contact us on 01273 774855 or email advice@pembrokefs.co.uk to discuss your financial plan and the steps you should be taking in the 2022/23 tax year. Please quote reference PFSIS.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.
T. 01273 774855 E. advice@pembrokefs.co.uk W. www.pembrokefinancial.co.uk
Marlborough House, 102-110 High Street, Shoreham-by-Sea BN43 5DB
Keith Relf & Keith Bonner - Managing Partners Pembroke Financial Services Limited is Authorised and Regulated by the Financial Conduct Authority. We are entered in the Financial Services Register under number 228341, www.fca.org.uk. Registered and Incorporated in England & Wales at Atlas Chambers, 33 West Street, Brighton, BN1 2RE under number 2518721. The FCA does not regulate National Savings, or some forms of Mortgage, Tax Planning, Offshore Investments or School Fees Planning.
