April 5th is the end of the tax year and it is an important date if you have an ISA or your child has a Junior ISA. There are limits on what can be contributed into ISAs and Junior ISAs in each tax year. These are known as the ISA allowance and Junior ISA allowance. If you don’t use all of your allowance in the tax year, you cannot carry it over to the next, so it’s important to make the most of it in each tax year.
Making a contribution by the deadline
The Beanstalk app shows how much unused allowance you or your children have left (just click on manage to see). If you wish to make a contribution to use your allowance, the contribution must be received by end of day on April 5th.
If you are sending your contribution from the app by Instant Bank Transfer, then you can do so on April 5th as long as payment is received by us by the deadline.
If you make your contribution by one off Direct Debit top up, then you must trigger the top up through the app by end of day on the 27th March to allow for Direct Debit timetables.
How allowances work
The allowance is the maximum contributions permitted in any given tax year. This is set each year and therefore can change from year to year. Any unused allowance is lost after the end of the tax year and a new allowance becomes available at the start of the new tax year. ISA transfers do not account towards your allowance.
What is the ISA allowance?
The tax-free ISA allowance for 2021/2022 is £20,000. This is the total amount of contributions that you are allowed to make in total, although you can split it between ISAs of different types.
What is the Junior ISA allowance?
The tax-free Junior ISA allowance for 2021/2022 is £9,000. Parents, friends and family can all contribute to a Junior ISA, so the total applies to all contributions made, although it can be split across different type of Junior ISA.
What are the benefits of using the allowances?
Money that is invested through a Junior ISA or ISA is free of any income or capital gains tax on any returns or income that is generated. This means that any returns or growth are larger than they would be if you had to pay tax. You may therefore want to use as much of the allowance as you feel able so that you make the most of this benefit.