The new financial year begins on 6th April 2022, and with it comes a new year of renewed ISA allowances. An ISA allowance is the total amount of money you can save without being taxed. Your allowances across various investment schemes have the potential to change each year, so we’ve broken down all you’ll need to know for your ISA allowance 2022/23.
Income Tax Allowance
Your income tax allowance covers three core areas. Your personal allowance is the total amount of money you can earn without being taxed. The basic rate limit is what you’ll pay if you earn more than the personal allowance and the higher rate limit is what you’ll pay if you earn more than the basic rate limit.
For the 2022/23 financial year your income tax allowances remain unchanged across the board. Meaning your personal allowance will remain at £12,570. The basic rate limit will remain at £12,571 to £50,270 with a tax rate of 20% and the higher rate limit will remain at £50,271 to £150,000 with a tax rate of 40%. However, if you earn more than £150,000 a year, you’ll be taxed at an additional rate which is 45%.
The new financial year doesn’t just bring a new allowance for only your earnings, but your savings as well. At the start of every financial year, you’re given an ISA allowance of how much you’re allowed to save without being taxed. This can be used in one ISA or spread across multiple. Shepherds Friendly have two ISA’s the Stocks and Shares ISA and the Junior ISA.
Stocks and Shares ISA
A Shepherds Friendly Stocks and Shares ISA is a great way to save from £30 a month, while also potentially gaining greater amounts than in a standard cash ISA. In a Stocks and Shares ISA savings will be invested across stocks and shares, equities, bonds, and property. However, if you value sustainability there is also the option to invest in a Sustainable Stocks and Shares ISA. For the 2022/23 financial year the ISA allowance hasn’t changed and lets you save up to £20,000 tax free.
A Shepherds Friendly Junior ISA allows you to save towards a lump sum for your child once they’ve turned 18 from only £10 a month or a £100 lump sum. A benefit of the Shepherds Friendly Junior ISA is that anyone can place a deposit in the plan, which is great if you’re a parent or a guardian or you if have nieces, nephews or grandchildren you’d like to see financially secure in their future. Like the Stocks and Shares ISA there is also the option to invest sustainably and open a Sustainable Junior ISA. For the 2022/23 financial year the ISA allowance hasn’t changed and lets you save up to £9,000 tax free.
Saving money you’ve been given is a great investment, but what about if you’re the one giving the money? For most gifts and cash given you won’t have to worry about if you’ll be taxed for it, as long as they’re up to £250. However, you can give away gifts worth up to £3,000 every financial year without having to pay any tax on it. This is known as your annual exemption. If you don’t use all of this amount in one year you can carry it over to the next financial year, but only for one year. For more information visit Giving Money: 3 things to know!
Make the most of your allowance
If you want your savings to make the most of your new ISA allowance in 2022/23, it’s wise to start investing sooner rather than later. These allowances only last for the single financial year and if you don’t use them, you’ll lose them. So, if you haven’t met your allowance from 2021/22 use what you can now to make the most of your savings opportunity.