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Where to put you £15,000 ISA allowance

If you’re thinking about your financial future, you may decide that opening an ISA – a tax-free cash ISA or tax-efficient stocks and shares ISA – is the right option for you. Not only can ISAs be opened quickly but with an increased New ISA allowance of £15,000 per individual (rising to £15,240 for the tax year 2015-16) you could potentially reach your savings goals a lot quicker.

The questions is, how should you make the most of this new ISA limit?

Put it all in a cash ISA

Tired of traditional savings accounts tied to the measly Bank of England interest rate of 0.5 per cent? Then putting your £15,000 allowance into a cash ISA could give you better returns. Just like normal savings account there are many different types of ISAs available but the main difference is you won’t pay any tax on the interest earned!

Put it all in a stocks and shares ISA

Placing your £15,000 allowance into a stocks and shares ISA is another option you could take which offers a range of tax advantages. Firstly, you don’t have to pay any capital gains tax on profits made from share price increases. You’ll also pay no tax or interest earned on bonds and income earned from any shares investments will be taxed at just 10 per cent.

Mix and match

New ISA rules mean you can now split the allowance between a cash ISA and a stocks and shares ISA in any way you see fit. It’s completely up to you.

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