6th April 2017 – Today marks the beginning of a new tax year and early-bird investors will be thinking about making the most of the new increased tax allowances.
The maximum amount that can be sheltered in an ISA has risen to £20,000.
Junior ISAs and Child Trust Funds have seen their allowance increase to £4,128.
The pensions allowance remains unchanged at £32,000 net (£40,000 gross) subject to tapering or up to 100% of relevant earnings if less than this amount subject to tapering.
Early-bird ISA investors were rewarded last year, earning over £2,000* more than investors who waited until the last minute. The average fund in the UK Equity Income sector – the most popular sector among our investors – rose by 14.49%* from the start of the tax year to 4th April 2017, turning the £15,240 allowance into a pot of money worth £17,448.96*.
Regular savers have also been rewarded, with 11 monthly payments of £1,270 equalling £15,007.64* already in the average UK Equity Income fund. When the twelfth payment is added, their pot could be worth £16,277.64 – depending on market movements too.
Of course, investing early is not a guarantee of success. Some years, early bird investors may lose money if the stock market does badly.
*Source: FE Analytics, total returns in sterling, 6th April 2016 to 4th April 2017.