The Cosmic Watchdog

UK households are being urged to take advantage of Stocks and Shares ISA limits before April following Rachel Reeves’ spring statement.

Rumours were abound in the past few months that Rachel Reeves could be looking at shaking up Cash ISA limits in the future, with the amount you can deposit in one of those tax-free savings accounts predicted to drop from £20,000 per year to as little as £4,000. The idea is to encourage savers to use Stocks and Shares ISAs to invest savings in instead, which would not have their limits cut, boosting economic growth as households invest.

But the Chancellor did not announce any changes to Cash ISAs or Stocks and Shares ISAs today, with any potential changes thought to be coming in the Autumn Budget instead. It means that savers have just days left to max out Cash ISAs or Stocks and Shares ISAs before the April 5 deadline for the new tax year.

Investment platform Hargreaves Lansdown has urged savers to make the most of their limits by maximising their investments before the end of the tax year on April 5 in a message to customers last week.

It said: “With UK tax bills nearing record highs, we think it makes sense to take advantage of your ISA and pension allowances if you can.

“Investing for 5+ years increases your chances of positive returns compared to cash savings. But investments rise and fall in value, so you could get back less than you put in.

“This isn’t personal advice. If you’re not sure what’s right for you, please ask for advice.”

Stocks and shares ISAs are completely protected from tax for the first £20,000 invested. You can also have a stocks and shares ISA open at the same time as a regular savings account ISA, as long as you only deposit a maximum of £20,000 across the two accounts in a single tax year from April to March.

Any money added to a stocks and shares ISA can’t be taxed and neither can the profits. If, for example you added £10,000 to a stocks and shares ISA and that investment grew by £2,000, you wouldn’t pay a penny on that in tax. And the £20,000 allowance resets annually, so you could have £100,000 in there in five years and still pay no tax.

The best Stocks and Shares ISAs to open right now

The best stocks and shares ISA on the market in terms of fees is Trading212, but the platform isn’t as established as some of the market leaders.

Many investors use Hargreaves Lansdown, which charges 0.45 percent per year but has access to a huge range of funds from active investing to passive funds like the S&P 500.

AJ Bell is another big trusted name, which charges 0.25 percent fees per year.

There’s also Vanguard, which takes between 0.15 percent and 1.49 percent but only sells its own funds – you can’t for example grab shares in a specific company.

Whichever one you choose, you cannot be taxed Capital Gains Tax on any of the money you deposit into these ISAs or any of the profits you make even when you withdraw the money.

Just remember that investments can go down as well as up, and don’t invest anything you couldn’t afford to lose and always seek advice from a qualified financial advisor.