Will you turn down a free tax-break?

You have an allowance right to stash up to £15,000 of your savings in a tax-free account, but you must use it by 5 April...

If you don’t make use of your annual Isa allowance, you lose an important tax advantage, warns Darius McDermott of Chelsea Financial Services.

“The Isa allowance has been raised to £15,000 in the current tax year but to take advantage you have to take up the allowance by 5 April. However that falls on Easter Sunday this year which means people may have even less time to choose what to do with their allowance as leaving it to the last minute could be problems,” he warns.

Even better, he continues, you can now switch relatively easily from a cash Isa to a stocks and shares Isa, since the switching rules were relaxed last year. “If you have savings outside an Isa, you lose out on a 20 per cent or 40 per cent tax break but, oddly enough, many of the cash Isas currently on offer have better rates than standard savings accounts, even before you’ve taken account of the tax advantages,” Mr Darius says.

He also points out that if you can manage to build up a sizeable pot using investments which, hopefully grow over the years, you won’t have to pay any capital gains tax on the proceeds.

There’s also the fact that Isa rules have been changed to allow people to pass on their Isa savings to their partner. It means when one spouse dies, the remaining spouse keeps the full tax advantage of any savings stashed in an Isa.

What investment opportunities does he tip for anyone thinking of investing now? Watch the video above to find out.

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