ISA deadline day is fast approaching

You've got until 5 April to make the most of your 2014/2015 ISA allowance before it's lost forever

ISA 2015The new tax year is almost here, meaning you've only got until 5 April to make the most of your 2014/2015 ISA allowance before it's lost forever.

An Individual Savings Account (ISA) lets UK residents enjoy tax-efficient returns on the money they put in their ISA. Each tax year you qualify for an annual ISA allowance - but you can't roll it over so it must be used within that tax year.  

If you've built up a savings pot that isn't in an ISA, consider whether switching might be a better option, as the tax you'll pay on any interest you earn will be reduced.  

How does an ISA work?

You can invest in up to two separate ISAs in any one tax year: a cash ISA and a stocks and shares ISA, and can choose the same or different companies. 

A cash ISA pays you interest on your savings, just like a bank deposit account. A stocks and shares ISA generally aims to give you a higher rate of return than you would earn from a typical deposit account; however, there's a risk that your money may go down as well as up.

In the 2014/2015 tax year you could save the full allowance - £15,000 - in a stocks and shares ISA, a cash ISA or a combination of the two. For example, if you invest £2,000 in a cash ISA, you'll have £13,000 left to invest in a stocks and shares ISA in this tax year (2014/2015).

From next tax year, the ISA allowance will increase to a total of £15,240.