With the ISA deadline a little over a week and a bit away, many Britons are looking to make the most of their ISA allowance before the end of the tax year. So how can you use your ISA allowance to gain monthly income? We’ve got the answers in our daily ISA blog today.
What’s a High Income ISA?
A high-income ISA is a particular way for you to use your ISA allowance to receive regular tax-efficient returns payments on either your investments, or savings.
These will ideally give you the highest possible income from your ISA.
This combines the benefit of a high-income investment with the straightforward tax-free nature of ISAs.
When will I be paid?
This income an be paid every:
- six months
- every year
- or every quarter
Depending on the account and the provider, you’ll have the choice when setting up your account what suits you.
This way you can have a regular ‘income’ from your account, which can be a useful supplication to your wages.
What options do I have with a High Income ISA?
There are a variety of high-income ISA accounts available from multiple providers. As with any ISA, it’s important to shop around to find the best account and provider which fits your situation and income goals.
You can choose income funds from all over the world, with different risk profiles and growth objectives. Some examples include:
- Equity funds
- Bong funds
- Property funds
- Specialist funds
- Cash funds
Is there a limit?
The limit you put into your account is the same as the yearly limit for the ISA. You can put up to £20,000 per tax year into an ISA account (per person) so this is the total amount you can put into an ISA for this tax year – 2019/2020. It was recently announced that this ISA allowance will remain the same for tax year 2020/2021.
Is a high-income ISA right for me?
A high income ISA might be right for you if…
- you’re not keen on the low interest rates offered by a standard Cash ISA
- you’re saving for a long-term goal, such a retirement as these can provide you with ‘income’ during retirement
- you’re looking to open a particularly high-return stocks and shares ISA account