SAVERS looking to tuck away some extra cash for a rainy day should consider opening an Isa NOW before they lose this year’s allowance for good.
Until Saturday, you can save up to £20,000 in an Isa (individual savings account) for the 2018/19 tax year.
Alamy You’ve got until the end of tomorrow to use this tax year’s Isa allowance
But come April 6, the 2019/20 tax year begins giving you a brand new £20,000 Isa allowance.
The problem is that if you fail to use this year’s allowance, you’ll only be able to tuck £20,000 in an Isa from Saturday while any other money you have or come into will have to be saved elsewhere.
So if you have £40,000, for example, you could tuck £20,000 in an Isa before Saturday, and another £20,000 into an Isa from Saturday onwards.
This is important because any interest earned in an Isa is tax-free year after year, meaning the taxman can’t get his hands on it.
Top tips for teaching kids to saveMAKE saving fun – try these tips to get your kids started:
Match your children’s savings on a pound for pound basis
Get your kids to put some of their pocket money into a piggy bank
Then take them to the bank every month to pay it in – get them used to the habit of saving and seeing their balance grow
Draw a chart on their wall and colour it in as the balance grows to keep them interested and so they can monitor their progress.
Save in a bog standard savings account or a bank account and interest is taxed after a certain amount – £1,000 for basic rate taxpayers, £500 for higher rate tax payers and there’s no allowance for additional rate taxpayers.
Louise Halliwell, senior savings manager at Yorkshire Building Society, explained: “The last day of the financial year marks a milestone date for savers to be aware of.
“Anyone hoping to take advantage of this year’s tax-free allowance should act quickly to make sure their money is deposited and processed for this financial year.
“The message is, use it or lose it, as the £20,000 Isa allowance can’t be rolled over to the next year.”
If you’re saving for your kids the same goes for Junior Isas (Jisas), although the limit for these is actually increasing from £4,260 now to £4,368 from April 6.
What Isas are available?
You can save money in one of each type of Isa although the maximum new cash spread across them all must be no greater than £20,000.
The different Isa types are:
Stocks and shares (investment) Isas
Innovative finance (peer-to-peer investing) Isas
Lifetime Isas (for buying a home or saving for retirement)
There are also Help to Buy Isas for first-time buyers but you’re not allowed to open one of these and a Cash Isa unless it’s a special type of account that allows you to split savings between the two.
PA:Press Association There are lots of different types of Isas so choose the one that best suits your needs
You can also get Jisas which are for children.How much can I earn in an Isa?
How much you can earn in an Isa depends on what type of account you go for.
If you opt for a Cash Isa the best paying rate if you want easy-access to your money is 1.5 per cent from Santander – but you can earn more if you’re willing to lock your cash away.
Check out our round-up of the Best Cash Isas for 2019.
The top paying easy-access savings account from Marcus pays the same rate at 1.5 per cent. See our round-up of the Top Savings accounts.
Keep an eye on rates though as when they drop you can transfer your Isa to a new higher paying account and this won’t count towards your annual Isa limit.
To switch providers, contact the Isa provider you want to move to and fill out an Isa transfer form – don’t withdraw the money as it will lose its tax-free status.
Also bear in mind that transfers can take up to 30 days depending on the type of account you’re transferring to and from.
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If you’re thinking about other ways to save, act now to snap up Nationwide’s top-paying 5 per cent regular savings account before it closes on Friday.
There’s also a new account that lets you automatically save £5 every time it rains.
Plus, here are the 11 best children’s savings accounts to consider in 2019.
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