With just a few days left in this tax year, it’s roll-over time again. The 2022/23 tax year ends on 5 April, while the 2023/24 season starts on 6 April. Both are key dates for investors looking to invest money into Stocks and Shares ISAs.
As one ISA season ends, another begins
In my long experience, there are two types of players in the ISA game. The first group are efficient and organised, like my lady wife. These sensible folk open their new ISAs on 6 April — the very first day of each tax year. They then invest their money early on and get it working for them straight away.
Alas, I belong in the second group of ISA investors — those ill-disciplined, last-minute Larrys of this world. For example, I still remember one last-day rush to open a Stocks and Shares ISA on 5 April maybe 20 years ago.
At the time, the maximum annual ISA allowance was £7,000. I found myself leaving work early to catch a train into central London. I then took the London Underground to the Isle of Dogs, where my stockbroker was based.
Arriving suited and booted and carrying my briefcase, I just managed to hand over my £7,000 cheque before my broker’s office closed late. I then had a long ride home across London, all hot and bothered. What a warped way to manage my money, agreed?
Don’t delay, open today
For the record, there are only five days remaining (not including today, 31 March) to open a Stocks and Shares ISA to invest in listed companies. Miss the 11:59pm deadline by even a minute and this year’s ISA allowance of £20,000 will be gone forever.
Still, at least a fresh, new ISA allowance of £20,000 springs to life on 6 April, so all is not lost. Even so, I’m determined in 2023/24 not to dither, procrastinate, and vacillate when it comes to opening my latest Stocks and Shares ISA. For once, I’ll try to seize my new allowance on day one and not day 365.
Why do I use an ISA?
The important thing to understand about an ISA is that it is not an asset or investment as such. It’s merely a tax-efficient wrapper around a collection of assets. These may include stocks and shares, bonds, unit and investment trusts, exchange-traded funds, index-tracking and mutual funds, cash, and so on.
Hence, I want to open a shiny new ISA next week so that I can avoid future taxes on any income and profits I make inside my latest ISA wrapper. Thanks to my ISA, I avoid taxes on my share dividends and any capital gains I make by selling shares at a profit.
Finally, with what do I intend to fill my new ISA? As a veteran value investor, I aim to buy undervalued individual shares that pay decent cash dividends to shareholders. Therefore, I intend to populate my 2023/24 ISA with a mini-portfolio of value, dividend, and income shares.
Once I’ve done this, I will sit back, hold onto my cheap shares, and wait for future tax-free returns to come rolling in!
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
The post Only 5 days left to open a Stocks and Shares ISA! appeared first on The Motley Fool UK.
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