The end of the current tax year is quickly approaching, and 5 April will be here before you know it. With a couple of short weeks left, we urge doctors to assess their financial plans, particularly the strategies they employ with their Individual Savings Accounts (ISAs).  It’s especially important because ISA allowances cannot be carried over and must be used in the current tax year.

Dental & Medical Financial Services have been assisting doctors with their financial planning for over 30 years. To learn more about the importance of maximising your ISA allowance and new rules that could impact your savings strategy, read on.

This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice. 

A tax-efficient haven

Individual Savings Accounts (ISAs) are a tax-efficient, flexible method for future planning. One of the main features of an ISA is its tax benefits as they are immune to both Income Tax and Capital Gains Tax on any growth within the fund or on income you withdraw. This makes contributing to an ISA a smart decision for those looking to grow their wealth while minimising tax liabilities. For doctors seeking to grow and protect their hard-earned money, contributing to an ISA is not just a wise move; it’s a strategic financial decision. 

ISA Annual Allowance 

In order to reap the full benefits of ISA tax efficiency, you will need to fully utilise your annual allowance before it expires. For the current tax year, you have the option of saving up to £20,000 in an ISA account. As there are several different kinds of ISAs, you can split your contributions any way you like, as long as you adhere to individual account limits that some have like Junior ISAs or Lifetime ISAs. This is a great strategy since it allows for diversification, and lets you spread the risk across different accounts, optimising your investment strategy

Each year, your annual limit resets, so any unused balance you cannot rollover to the next year — it all must be saved in the current tax year. Maximising your ISA allowance is crucial for building a robust financial portfolio and ensuring long-term wealth growth.

New tax year, new ISA rules

The Autumn Statement 2023 brought significant changes to ISA rules, which are set to take effect from April 6, 2024. The changes aim to enhance flexibility, choice, and the development of long-term investment products.

Here is an overview of the new rules:

• Savers can subscribe to multiple ISA subscriptions of the same type every year
• Partial transfers between providers for current-year ISA subscriptions will be allowed
• The need to annually reapply for an existing dormant ISA will be eliminated
• Innovative Finance ISAs will expand to include Long-Term Asset Funds and open-ended property funds with extended notice periods
• Specific fractional shares contracts will be permitted as eligible ISA investments.
• The ISA reporting system will undergo digitalisation, supporting the development of digital tools for investors.
• Account opening age for adult ISAs will be harmonised to 18.

Time is running out — act now

If you are a doctor that wants to optimise your ISA strategy and enjoy all the tax-free benefits they allow, now is the time to act. The end of the tax year is just around the corner and you don’t want to miss out on the opportunity to make the most of your annual ISA allowance.

If you have questions or need assistance with financial planning, we are here to help.

Don’t delay; contact the experts at Dental & Medical Financial Services today to discuss your ISA options and maximise your allowance before tax year-end.

Free download Guide – Making the Most out of ISAs