Bed & ISAs mean ‘more than ever’ now to beat April tax changes

Those who hold investments jointly with a spouse have £24,600 to use up this tax year – as opposed to the £12,000 in total from April 6.

Similarly, those with dividend-paying assets held outside an ISA might also risk breaching their dividend allowance limit when it halves next year.

Ms Haine said: “Dividend tax on the income investors receive from shares, funds or investment trusts is charged at 8.75 percent for basic rate taxpayers, 33.75 percent for higher rate taxpayers and 39.35 percent for additional rate taxpayers.

“The alternative of holding investments in an ISA lets your money compound and grow without the risk of taxation.”

Four step guide to Bed and ISA

Those who don’t have new money to invest to fill up their annual £20,000 ISA allowance, but do hold other investments and are interested in the benefits of a Bed and ISA can look into the following steps to open one.

Step 1: Open an ISA or top up an existing account

According to Ms Haine, people should first set up a stocks and shares ISA. This can either be with the same provider as their general investment account or with a different provider.

She added: “Remember, while you can have more than one type of ISA, you can only contribute to one stocks and shares ISA per tax year.”

Step 2: Check ISA allowance

Those who already have an ISA in place and have already made contributions into this tax year – as well as to a Cash ISA – should calculate how much of their £20,000 they have left.

Ms Haine said: “Go over that figure and you will need to let HMRC know on the ISA helpline on 0300 200 3300 and they will advise on the best steps to rectify the situation.”