Martin explained to listeners on his BBC podcast that the deadline for paying into a cash ISA for the 2023/24 tax year was midnight on April 5 with the new tax year starting the next day on April 6
Martin Lewis has issued an urgent warning to anyone with savings ahead of an upcoming tax deadline.
The MoneySavingExpert.com founder issued the warning on his BBC Radio 5 Live podcast and if ignored, Brits could find themselves in a spot of bother with HMRC. Martin explained to listeners that the deadline for paying into a cash ISA for the 2023/24 tax year was midnight on April 5 with the new tax year starting the next day on April 6.
An ISA gives you a tax-free allowance, meaning any interest you earn on your savings won’t be subject to tax. Martin said explained that this was like putting a wrapper around your savings. However, if you have not used your full annual ISA allowance by the deadline, you will lose it.
He added: “The big difference is the tax office can no longer bite it because it’s protected by that wrapper, so you get £20,000 worth of that wrapper each year. Martin urged Brits with larger savings pots to take full advantage of the ISA perk as they could have to pay tax on their savings.
Martin said: “Use them or lose them. There are only a few weeks left to use your ‘23/24 Cash ISA or Lifetime ISA allowance. Millions of people are wasting money possibly hundreds of pounds or thousands of pounds by not using ISAs when they should. The tax year ends on April 5, it’s not long to go now and if you don’t use them, you lose this year’s allowance.
Even with the deadline being April 5, the Money Saving Expert founder warned that people may want to look into sorting it out sooner rather than later. He added: “You have until April 5 to get this year’s allowance into your cash ISA. Now that’s the final deadline but in practice, you need to do it earlier because there’s bureaucracy and administration that can take several days. So frankly you should be doing it this week if you’re going to do it.
“Get on with it this week, because something else that happens near the ISA deadline is some of the most competitive providers say ‘we’re closing our doors for this tax year’. If you’re leaving it to the last minute you’re going to scupper yourself from the competition environment that we have about that.”
If you do not have an ISA, Martin advised that you needed to look at your savings pot and work out how much interest you are set to earn and if it was over the Personal Savings Allowance then you needed to look at an ISA quick.
The Personal Savings Allowance is the amount you can earn in interest before you owe the Government tax on your savings. The allowance is set at £1,000 for basic rate taxpayers and sits at 20%. For higher 40% rate taxpayers, the allowance is £500. An additional 45% rate taxpayers receive no tax break at all on savings. Martin explained that people who didn’t make enough interest on their savings to surpass the allowance didn’t really need to have an ISA – but instead should look for the highest paying savings account.
Martin said: “How much money would you have to have in there to earn a grand’s worth of interest? Well, the answer is £19,570 and if you’re a higher rate taxpayer, how much would you have to have in there to earn £500 of interest? The answer is £9,800.
“So as you can see while those numbers are large there are still many people when I do surveys who have over £10,000 worth of savings, and therefore there’s a whole raft of people who as long as you’ve got the top accounts, then you should be protecting some of it by putting it in a Cash ISA because that is totally tax free. So that’s the basic nutshell.”
