Your new tax year investing checklist

by InvestEngine

The new tax year is here! For investors, this means now is the perfect time to give your investments a tune up so they’re optimised for the year ahead.

In this article, we’ll take a look at the ways in which you can take advantage of your allowances. From evaluating the risk level of your portfolio to changing providers altogether, this is your essential checklist to get through as the new tax year gets into full swing.  

First, though, we’ll go through the basics of what the allowances are and how they work.

What are the ISA and SIPP allowances?

Both the individual savings account (ISA) and the self-invested personal pension (SIPP) have yearly tax-free allowances for investors to use. This means that, up to a certain threshold, investments in both wrappers grow tax-free. 

The allowances are: 

  • Each tax year, investors can put up to £20,000 into an ISA
  • The yearly limit for a SIPP is £60,000, with any unused allowance from the previous three tax years carried forward

For those that have maxed out their ISAs, general investment accounts (GIAs) are also a great option – they don’t offer any special tax benefits but they allow investors to invest any amount they like. 

How to make the most of your allowances

Use as much as possible

For an investor, the ISA and SIPP allowances are a gift. The ability to grow your wealth tax-free shouldn’t be passed up by anyone with the means to do so. 

Review what you’re invested in

A sensible starting point is to ensure your current investments still match up with your goals. This means reviewing factors like how long you’re investing for, how reliant you are on your investments, and your attitude towards risk. 

If you’re willing and able to tolerate high amounts of risk in your portfolio, then your portfolio should consist mainly of equities. If not, then it should consist of low-risk investments including bonds. 

A portfolio which is too risky may result in you selling your investments when the market falls, locking in losses, rather than staying invested for the long term. Investing in a portfolio which is too low-risk means missing out on returns which could have been earned had you invested in a higher-risk portfolio.

Explore your investment options

Once you’ve reviewed your existing investments, you can explore alternatives. For example, if you want to reduce the risk in your portfolio, you can consider Money Market ETFs, which aim to track the Bank of England’s SONIA rate (currently 5.19%) for more steady returns. 

Alternatively, you could explore thematic investing if you want to focus your portfolio on specific industries. We’ve segmented our ETF range into Collections to make finding the funds for your portfolio easier than ever – what could you add to your portfolio before the tax year ends?

Consider a Managed portfolio

While it’s never been easier to manage your own portfolio, many investors feel they lack the time, knowledge, or confidence to do so. A portfolio review before the end of the tax year provides an opportunity to evaluate whether or not you’re happy taking on management of your portfolio. 

If, however, you’d rather save the time, hassle, and energy by outsourcing management to an expert, InvestEngine offers a range of portfolios managed by our team of investment experts. 

Review your investment provider

Investors will value different things when it comes to what they look for in their platform – whether that be ease of use, customer service, cost, or range of investment options. 

A portfolio review provides a chance to re-assess whether you’re happy with your current provider, and investigate whether there are any more suitable alternatives available on the market.

It’s never been easier to transfer an ISA. For a limited time, when you transfer yours to InvestEngine, you can get a bonus of up to £2,500 for your portfolio (Ts&Cs apply). 

It’s completely free to switch and we’ll take care of the legwork for you. Follow the link above to get the ball rolling!

Important information

Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.

This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.

Tax treatment depends on personal circumstances and is subject to change, and past performance is not a reliable indicator of future returns.

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