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Why Should You Invest In An ISA This Year?

Acting Sooner Can Boost Your Financial Goals

Many people wait until the end of the tax year to contribute to their ISA (Individual Savings Account). But acting earlier can make a big difference. Starting now gives your money more time to grow and increases your chances of reaching your financial goals.

Here’s why you should consider making the most of this tax-efficient savings opportunity in 2025/26.

Get Ahead with Compound Growth

The sooner you invest in your ISA, the sooner your money starts working. Even small returns can build up significantly over time thanks to compound growth.

This is especially important in times of inflation. While inflation reduces the value of cash in regular savings accounts, investments held in an ISA are protected from tax—and they help safeguard your wealth against rising prices.

Protect Your Gains from Capital Gains Tax

Another key benefit of an ISA is tax protection. Investments outside of an ISA may be subject to Capital Gains Tax (CGT) once profits exceed the allowance. For higher-rate taxpayers, CGT can be as high as 24%.

Since April 2024, the annual CGT allowance has been cut to just £3,000 and remains frozen for 2025/26. With this reduction, tax-efficient planning has never been more important. An ISA ensures that all gains made within it are free from CGT.

Keep More of Your Income

ISAs also protect any income your investments generate, such as dividends from shares or interest from bonds. This matters because the annual dividend allowance is just £500 in 2025/26. Anything above this is taxed at 8.75%, 33.75% or 39.35%, depending on your income.

By holding investments inside an ISA, you keep more of your income. This can be reinvested to grow your savings faster—or used to support your lifestyle.

Flexible Ways to Invest

You can use an ISA in a way that suits you:

Stay Consistent with Automated Savings

Don’t have a lump sum to invest? You can set up automated monthly payments into your ISA. This helps you stay disciplined, removes the temptation of trying to “time the market,” and ensures steady progress toward your goals.

Don’t Miss Out on Your Allowance

Your ISA allowance works on a “use it or lose it” basis. For the 2025/26 tax year, you can save up to £20,000 across ISAs. If you don’t use it before 5 April 2026, it’s gone for good.

By starting early, you avoid the last-minute rush and give yourself peace of mind that your savings are working effectively throughout the year.

Get Expert Support

ISAs are a powerful way to save and invest tax-efficiently, but everyone’s situation is different. How much to invest, where to invest, and how to balance risk all depend on your personal circumstances.

That’s where professional advice can help. With guidance, you can:

Start Early, Start Smart

Don’t leave it to the last minute. Whether you’re aiming for tax-efficient growth, building flexible savings, or protecting your income from tax, acting sooner puts you in a stronger position.

Ready to Discuss Your ISA Strategy?

If you’re ready to get started or want to explore your ISA options, speak with us today. For more background, you can also visit the UK Government’s guide: How ISAs work – GOV.UK.

Your future starts today—so don’t delay.

 

Disclaimer:

THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE. THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED. THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE ESTATE PLANNING, TAX ADVICE OR TRUSTS.

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