Mark your calendars, the end of the tax year is almost here! ⏰ While you may not feel the same excitement levels as you do each December 31st, ISA season still deserves your full attention because in some cases, there’s free money up for grabs. And once the tax year rolls over, you lose it for good! 💸
Here’s everything you need to know about the end of the tax year (EOTY) – from ISA allowances to the Lifetime ISA bonus, including our important 2020-21 tax year collection timings.
What are the end of tax year timings?
The official 2020-21 tax year runs from 6 April 2020 and ends on 5 April 2021. However, as Moneybox operates on a weekly cycle, collecting your money on Wednesdays and direct debit taken from your bank account the following Monday. This means the last chance to open a new Moneybox ISA or Lifetime ISA if you’d like to contribute for the 2020-21 tax year will be midday 30th March. Our final collection (money added to a ISA or Lifetime ISA) for this tax year is midday 31st March.
Around midday on Wednesday 31st March we’ll begin to collect the amount shown in your green circle on your This Week tab, with the money leaving your bank account a few days later. The Easter holiday period also falls around this year’s EOTY and so, due to the bank holidays, your money will likely leave your bank account on 7th April – but don’t worry, if it was collected from your green circle on Wednesday 31st March, it still counts towards the 2020-21 tax year.
The first collection of the 2021-22 tax year will be on the 7th April.
What is an ISA?
Everyone* over the age of 18 can save up to £20,000 each tax year into an ISA (Individual Savings Account). It’s a type of tax-wrapper that allows you to hold cash and shares free of tax on interest, dividends and capital gains.
Examples of ISAs include Cash ISAs, Stocks and Shares ISAs and Lifetime ISAs. You can only put money into one of each kind of ISA each tax year, but importantly, if you don’t use your allowance it can’t be carried forward, so if left unused you lose it for good.
*You must be a UK resident and a non-US person.
How does the Lifetime ISA allowance and bonus work?
Up to £1,000 for free each tax year towards your first home? Yes please! 💰 With the end of the tax year fast approaching, now’s a great time to consider saving for your first home with a Lifetime ISA and claim your 25% government bonus. So far this tax year we have paid out £95 million in Lifetime ISA bonuses! 🎉
About the Lifetime ISA 🏡
- The Lifetime ISA is a product designed by the government to help you save for your first home.
- You can pay in up to £4,000 per tax year and the government adds a 25% bonus on top. This means you could receive up to £1,000 for free each tax year! 💰
- Lifetime ISA bonuses are paid out at the end of each month.
- Moneybox offers a Cash Lifetime ISA and a Stocks & Shares Lifetime ISA.
- Our market-leading Cash Lifetime ISA offers an interest rate of 0.85% AER (variable), this includes a 0.5% base rate (variable) and a fixed one year bonus interest rate of 0.35%.
- Interest on the Cash Lifetime ISA and any gains made on the Stocks and Shares Lifetime ISA are tax-free.
- You can contribute up to £20,000 across all ISA products in a single tax year and the Lifetime ISA counts towards this allowance.
- You can only pay into one type of Lifetime ISA per tax year. If you’ve already done this with another provider but wish to open a Moneybox Lifetime ISA, you can simply transfer-in from within the app (see transfer details below).
With a Lifetime ISA it’s important you know 🤓
- If you need to withdraw money for any reason other than buying your first home (up to £450,000) or retirement, you’ll pay a government charge of 25% on the the amount you withdraw. This means you’ll get back less than you’ve put in. Please note, this excludes investment gains/losses and fees for a Stocks & Shares Lifetime ISA.
- You need to have your Lifetime ISA open for at least one year before you can use your money and bonus (without incurring any govt withdrawal charges) to buy your first home, and the time starts from your first deposit!
- To open a Lifetime ISA you must be aged 18-39. You can continue to pay into a Lifetime ISA until age 50.
- With a Stocks and Shares Lifetime ISA your money is invested. The value of investments can go up and down, and you may get back less than you invest.
Explore the Moneybox Lifetime ISA and open an account by 12pm, 30th March to make this tax year’s cut off.
How can I maximise my ISA allowance with Moneybox?
Investing into a Stocks & Shares ISA is one of the best ways to make your money work harder over time as it allows you to earn tax-free gains. 💪 Investing, although riskier, can also offer higher long-term returns than saving into a Cash ISA or savings account. 🚀
- Remember, your annual allowance across all ISA products is £20,000 per tax year.
- Any interest, dividends and capital gains accrued are tax free.
- With a Stocks and Shares ISA your money is invested. The value of investments can go up and down, and you may get back less than you invest.
- There’s now only a short time left to make the most of your 2020-21 allowance as it won’t carry over into the next year!
- You can only open one type of ISA each year. For example, you could open one Stocks & Shares ISA and one Stocks & Shares Lifetime ISA in the same tax year, but you’re not allowed to open two Lifetime ISAs in the same tax year.
- Hold an ISA elsewhere? It’s simple to transfer over your ISA into Moneybox.
Ready to start your ISA journey? Open a Moneybox Stocks & Shares ISA by 12pm, 30th March to make this tax year’s cut off.
Can I transfer in my ISA or Lifetime ISA to Moneybox this tax year?
Yes! Why not see all your money in one place? 🙌 If you have an ISA or Lifetime ISA with another provider, you can transfer it into Moneybox. If you’re saving for your first home, you can even transfer your Help to Buy ISA into a Moneybox Lifetime ISA and take advantage of the 25% govt bonus (up to £1,000 free each tax year)! Govt. withdrawal charge may apply.
Simply request a transfer form in-app (Settings > Transfer), fill in your details, then email it back to us! Our dedicated transfers team will take it from there and update you on the progress.
If you are transferring into a Lifetime ISA – For your transfer to count for this tax year (2020-21), we need to have received your Transfer form by 31st March.
What about Junior ISAs?
Like adults, children also have tax-free allowances that can be used each year. A Junior ISA, which is opened and managed by a parent or legal guardian, is an ISA with an annual allowance of £9,000 per tax year and helps you to start saving or investing towards their future.
They won’t be able to access the money until they are 18, at which point it automatically turns into a normal ISA and transfers into their name, giving them full access. There are two types of Junior ISAs – Cash and Stocks & Shares. The Junior ISA allowance is not included in your overall adult ISA allowance.
Moneybox offers a Junior Stocks & Shares ISA, which can be opened via our separate iOS only Junior ISA app. You can sit back and relax knowing your child’s money is working hard in the background, and you can check in to see how their investments are performing any time.
Open a Moneybox Junior ISA by 12pm, 30th March to make this tax year’s cut off.
We offer cash savings products and long term investment products. All investing should be regarded as longer term (at least 5 years). The value of your investments can go up and down, and you may get back less than you invest.