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It is little over a fortnight until the annual deadline for contributions to an ISA.
After that date, the current tax year’s ISA allowance will be closed forever. Any new contributions will eat into a future year’s allowance.
With that in mind, here are three things I am doing right now in preparation.
1. Figure out how much spare allowance is left
The exact figure varies for some investors depending on their age and the types of ISA concerned, but as a broad rule, most British adults have an annual ISA contribution allowance of £20,000.
Some will have long since used their full allowance. But many people will still be sitting on some or all of their allowance for the current tax year, unused.
A simple but useful first step now is assessing how much unused allowance (if any) one still has for the current tax year before the ISA deadline arrives.
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.
2. Consider how to fill the gap
If this year’s allowance is not used by the end of the tax year next month, it will disappear.
However, investing is only one of life’s spending priorities. At any given moment, many of us may have other important needs pressing down on our bank balance.
So, I think now is a good moment to sit back and take a moment to decide how much I can realistically put into my ISA before the end of the current tax year.
Some people leave that to the last moment. But financial planning can take time and so can money transfers. So I am not leaving things to chance in the countdown to this year’s contribution deadline.
3. Think about the best ISA to use
Another, connected, question, is what ISA to put that money into.
There is a wide variety of Stocks and Shares ISAs available on the market. Each has its own features and benefits, with different cost structures.
Now is as good a time as any to decide what is the right one for any more contributions during the current tax year.
Something else I’m doing
While those three tasks strike me as meriting immediate attention, something that may not be so urgent is actually investing the money.
As the name suggests, the contribution deadline allowance is for putting money into the ISA. But once it is inside the tax wrapper, it can be invested at any point.
There is no rush. Still, right now, I think there are some UK shares worth considering.
Take Greggs (LSE: GRG) as an example.
The Greggs share price has fallen 14% over the past year. Appetite for the pastry maker has waned thanks to risks including higher National Insurance charges eating into profits, weight loss drugs hurting customer demand, and poor demand planning denting earnings. That happened last summer and could occur again.
Still, I think the fall has likely been overdone from a long-term perspective.
Greggs has thousands of shops and a huge number of customers. Its value proposition is strong as few if any rivals on a national level offer equivalent products at a similar price. Greggs’ economies of scale help it a lot.
Will that change? Greggs continues to grow – and I think it can do so in coming years. I plan to hang onto my Greggs shares.
