Five reasons to use an ISA
Let’s dive into five reasons why low-cost, little effort ISA investing is a savvy move.
1) Tax-free goodness
ISAs are ‘tax wrappers’ which shield your money from UK capital gains and dividend tax.
You’ll get to keep any investment growth you make, and any interest or dividends made from the cash and investments is also free from tax! This could help you reach your investing goals faster than an account without tax-free benefits, especially as the main tax allowances and thresholds stay frozen.
2) £20,000 a year - yes, please!
Every new tax year, you get a brand-new ISA allowance. The main allowance is £20,000 for adults and this includes the £4,000 you can pay into a Lifetime ISA each tax year.
If you don’t use your allowance by 5th April each year, it won’t roll over to the next year, so make sure you make the most of it before then!
3) Flexibility at your fingertips
You can take cash out of ISAs whenever you need to, but you can also pay it back in if you have spare allowance.
Just remember that Lifetime ISAs have their own rules for taking money out – if you don’t meet them, you’ll face a hefty 25% government penalty charge on what you withdraw, meaning you could get back less than what you pay in.
4) Mix and match ISA styles
Get creative! For example, you could pay into an instant access cash ISA now to boost your emergency fund, as well as a Dodl investment ISA for the long term. You can pay into multiple ISAs of the same type in a tax year, provided you don’t bust the overall ISA allowance (excluding Lifetime ISAs).
5) Start small, think big
While the ISA allowance is generous, saving and investing isn’t just for people with a lump sum to put away. With the Dodl investment ISA, you can get investing for the long term with a direct debit of as little as £25 a month.
So, feeling readier than ever to start investing?
🔔 Remember, investing carries risk and nothing in this article should be taken as advice - Dodl doesn't give advice, but we do hope the info is helpful!