Five reasons to use an ISA

As the ISA celebrates its 25th birthday 🎉, let's dive into five reasons why low-cost, little effort ISA investing is a savvy move.

Authored on
25 Jan 2024
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Category
Why invest?
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Read time
  4 minute read

1) Tax-free goodness 🌈

ISAs are ‘tax wrappers’ – which means they protect what’s in them from 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. For now though, you’ll need to stick to one ISA of each type (i.e. one cash ISA or one investment ISA), but from 6th April 2024 you’ll be able to 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?

Get started today


🔔 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!



It's important to know

You have to be solely a UK citizen and resident to open an account with Dodl. If you're not solely a UK citizen but still want to invest, you may be able to open an account with our parent platform AJ Bell. 

The past performance of investments isn't an indicator of their future performance and their value can go down as well as up. This means you could get back less than you originally invested. 

Dodl doesn’t offer any advice so if you’re not sure about the risks involved with investing, you should speak to a suitable financial adviser. 

How you're taxed depends on your circumstances, and tax rules can change in future.