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ISA deadline closes in: have you made the most of your tax-free allowance?
The deadline for using up your 2013/14 tax-free allowance is midnight on April 5. Savers could miss out if they fail to use the tax-free incentive, although some have argued people could lose out to inflation because interest rates are low.
ISAs, or individual savings accounts, allow individuals to deposit up to £5,760 in cash – or £11,520 if it’s in a stocks and shares ISA – tax-free this year. There are an increasing number of providers now offering ethical and sustainable ISAs, as incorporating values into investments moves into the mainstream.
According to Ethical Consumer, the Ecology Building Society, Charity Bank and Triodos offer the best responsible ISAs available on the market. Despite this, options still remain limited and a wider selection could boost the sector and offer long-term returns to individuals whilst benefitting society and the environment.
Will Ferguson, head of communications at Triodos Bank, previously argued that green ISAs, which were proposed by then-shadow chancellor George Osborne six years ago, could encourage public engagement with, and inject capital into, the green economy. This type of tax incentive would show savers and investors the clear economic benefits of green investment and could go some way to filling the investment gap in the area.
At this year’s budget announcement Osborne announced he would increase the “simplicity, flexibility and generosity” of ISAs by creating a single new ISA and rising the annual limit to £15,000. Widening the ISA regime will give investors more control over their finances and allow them to include their personal values in financial decisions to a greater extent.
Crowdfunding website Abundance Generation has warned that low interest rated means savings invested in cash ISAs could lose value because of inflation. Instead, the organisation argued that savers could invest in renewable energy projects as an alternative means to grow their savings and boost Britain’s green economy.
Research has also shown that low interest rates, among other financial concerns, have led to a fall in the number of people putting their savings into a cash ISA – collectively costing consumers an estimated £191 billion in tax-free savings.
Further reading:
Green ISAs: it’s not too late to resurrect an inspired idea
Consider sustainability and ethics when investing in ISAs this year
Savers warned about inflation ahead of ISA deadline
First UK Islamic ISA gives consumers ethical tax-free way to save