Time to stash the cash with a tax-free ISA

THE ISA season is rolling around again, and this year it really matters.

- By HARVEY JONES

With Chancellor Rachel Reeves hiking taxes from almost every angle, the humble Individual Savings Account has become one of the most powerful personal finance tools we've got.

The annual allowance deadline is just over two months away, at midnight on April 5, so now is the time to start thinking and planning how to make the most of it, rather than risk letting it go to waste.

ISAs are set to save Britons an estimated £9.65billion in income tax and capital gains tax in the current 2025/26 tax year. That's fractionally down on last year, as falling interest rates hit returns on Cash ISA deposits.

But it’s up a remarkable 45% in just two years and more than double what savers were sheltering five years ago.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said a key reason is that while other tax allowances have been hit, ISAs have been left untouched. “The capital gains tax (CGT) annual allowance has been slashed from £12,300 to £3,000, and the dividend allowance from £2,000 to £500.” The CGT rate on stocks and shares has climbed too, while Reeves slaps a 2% surcharge on dividend tax on shares held outside ISAs from April 6, followed by an extra 2% charge on non-ISA savings interest from April 6, 2027.