WHO WANTS TO BE AN ‘ISA MILLIONAIRE’?
Tax-free savings accounts have been ‘a thing’ since the introduction of PEPs in 1986.
In 1990 TESSAs were born, with ISAs appearing for the first time in 1999.
So for the last 36 years, it has been possible (and encouraged) to save tax-free up to certain limits.
As you are probably aware the current limit for ISAs is £20,000 per tax year.
There was an article in the news recently saying that HMRC has confirmed that there are now more than 2,000 ‘ISA Millionaires’ in the UK.
The first ever ISA Millionaire is thought to be Lord Lee of Trafford. He hit the £1,000,000 mark in 2003 (sixteen years after investing his first £1). He invested the full amounts allowed each year into stocks and shares accounts (totalling £126,000). All interest and dividends were invested back into his portfolio and the power of compounding is clearly demonstrated here (with growth in the sum of just under £900,000 to hit that magical £1million).
There is no Capital Gains Tax to be paid on it and no Income Tax on the dividends either. It IS what it ‘says on the tin’ … completely tax-free.
It has been calculated that investors putting in their first £1 today could become ISA millionaires in approximately 22 years (depending on returns) – and that’s if the annual allowance remains at £20,000!
So when you hear any of us on the Team at Solomon’s ‘reminding’ and ‘gently nudging’ you about making annual ISA contributions (or better still – setting up a monthly Direct Debit!) – there is a very good reason for this.
We encourage all our clients to save regularly in this way and maximise the allowances whenever possible – and so this is yet another timely reminder from us that if you want to use your allowance for the 21/22 tax year – you must do so very soon – time is running out – and it’s a case of ‘use it or lose it’.
Please let us know urgently if you are intending on making a contribution to your ISA in the 21/22 tax year, so that we can make sure this is processed within the deadlines.