ISA deadline 2020: When is the ISA deadline? Has it been postponed due to coronavirus?
There are four different types of ISA (Individual Savings Accounts): a cash ISA, stocks and shares ISA , innovative finance ISA and Lifetime ISA. You do not need to pay tax on interest on cash in an ISA or income from investments in an ISA.
If you complete a tax return, you do not need to declare ISA interest, income or capital gains on it.
Every tax year, which runs from 6 April to 5 April, you can deposit money into one of each kind of Savings Account.
You are able to save up to £20,000 in one type of account or split the allowance across some or all of the others – but you can only pay £4,000 into your Lifetime ISA in any given tax year.
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When is the deadline, and has it been postponed amid the coronavirus crisis?
As it stands, people have until midnight on 5 April to pay in up to the limit of £20,000 into their ISAs.
Failure to do so will see savers lose any unused allowance for this tax year.
Anyone living in the UK and aged 16 or over is able to open a Cash ISA, while anyone 18 plus can invest in a Stocks and Shares ISA.
Peer-to-peer lending platform, Sourced Capital, has called for a delay to the existing April deadline due to the circumstances surrounding the coronavirus outbreak in Britain.
This is to allow those investing via an Innovative Finance, Cash or Stocks and Shares ISA to get the most out of their tax-free allowance.
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Sourced Capital are urging the Government to push back the deadline until October, in a bid to allow those investing through an ISA to maximise the limited allowance once they are back on their feet financially.
Founder and Managing Director of Sourced Capital Stephen Moss said: “There are just a few days left if you do want to make the most of your tax-free ISA allowance for this financial year, but with many of us now struggling to work due to the sanctions imposed because of the coronavirus, we believe the Government should delay this deadline until October at least.
“Doing so would hopefully allow for the dust to settle and for the many who have seen their income dwindle, to return to work and accumulate the savings necessary to maximise the benefit of their chosen ISA scheme.
“With a second reduction in interest rates to a low of 0.1 percent, this is even more vital as the returns available were already slim, to say the least.”
Which ISAs have been the most successful for savers?
During the tax year of 2017-2018, the average person deposited £5,115 into a cash ISA with an average interest rate of 1.31 percent, which brought a return of £67.
For those that saved their full £20,000 allowance, the same rate of return means they earned an additional £262.
During the same period, the average Stocks and Shares ISA user saved £10,124 at an average return rate of 4.8 percent, bringing a median income of £486.
Those who saved £20,000 at the same rate saw returns of £960.
There has, however, been a surge in popularity for the Innovative Finance ISA, which has an average return rate of 10 percent.
With the average saver depositing £6,409 into their account, they saw a return of £641 through the Innovative Finance ISA throughout 2017-2018.
A £20,000 investment at 10 percent interest would have seen a massive return of £2,000.
What is an Innovative Finance ISA?
IFISA is another type of Individual Savings Account brought into effect in April 2016 for UK taxpayers.
The IFISA can yield returns as high as 10 to 12 percent a year.
Similar to the Cash ISA and Stocks and Shares ISA, the IFISA allows you to invest your money into the peer-to-peer market.
Just like the others, an IFISA gives you an allowance of up to £20,000 which you can distribute across your other ISAs should you so wish, as well as the option to transfer your previous year’s ISA investments into it.
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