5th February 2024
As the tax year deadline of 5th April approaches, now is the perfect time to ensure you’re making the most of your financial opportunities. An Innovative Finance ISA (IFISA) offers a tax-free way to grow your investments while directly supporting UK businesses. Here’s how to maximise your IFISA allowance and make every penny count.
- Understand the ISA Allowance
Each tax year, UK adults can save up to £20,000 tax-free across all ISAs, including Cash ISAs, Stocks and Shares ISAs, Lifetime ISAs, and IFISAs. This allowance resets annually at the start of the new tax year, and any unused portion is forfeited.
Using your full ISA allowance is essential to making the most of this generous government incentive. With an IFISA, all the interest you earn is tax-free, allowing your savings to grow faster compared to traditional savings accounts.
- Transfer Underperforming ISAs
If you’re holding a Cash ISA with low interest rates, consider transferring it to an IFISA. Current Cash ISA rates hover around 4%-5.5%, while IFISAs offer potential returns of 12%-18%, depending on the investment grade.
Transferring is simple, keeps your funds within their tax-free wrapper, and doesn’t count towards your annual allowance. This means you can move as much as you like from previous years’ ISAs into an IFISA to potentially achieve better returns.
- Reinvest Your IFISA Balances
For those with active IFISAs, reinvesting repayments can significantly boost returns. Platforms like Crowd2Fund allow you to reinvest earnings into new opportunities, benefiting from compound interest and ensuring your money is continually working for you.
By reinvesting before the tax year ends, you can optimise your portfolio and ensure you’re using your allowance effectively.
- Diversify Your Investments
A diversified portfolio is key to managing risk in IFISAs. Platforms such as Crowd2Fund enable you to choose where your money goes, whether it’s in tech start-ups, sustainable initiatives, or professional services.
By spreading investments across multiple businesses and sectors, you can reduce the impact of a potential default while aligning your portfolio with your values.
- Act Before the Deadline
The clock is ticking. The tax year ends on 5th April, and any unused portion of your £20,000 ISA allowance will be lost. Acting now ensures your investments remain tax-efficient, giving you the best chance to grow your wealth while enjoying the tax benefits of an IFISA.
Ready to invest? Visit Crowd2Fund IFISA today to explore current opportunities and start building your tax-free investment portfolio.
