The clock is ticking: Smart savings moves to make before the new tax year starts

With the end of the tax year fast approaching on Saturday, April 5, time is running out for savers and investors to make the most of allowances before they “reset”.

But research indicates that “investment anxiety” is holding some people back, with seven in 10 (70%) UK adults citing barriers such as a lack of experience or concerns around losing money.

Craig Rickman, a personal finance expert at interactive investor, which commissioned the research, suggests firstly, making the most of your Isa allowance.

The annual limit for the amount that can be newly saved into Isas is £20,000.

Rickman says: “If you have unused Isa allowance this tax year and plan to add more, make sure you do before the allowance resets.”

He also highlights the various different types of Isas to choose from, including Lifetime Isas, Innovative Finance Isas and Junior Isas (for children). Savers may choose to hold their money in cash, stocks and shares, or a combination.

Lifetime Isas can be useful to people saving for their first home as they come with a government bonus, but there are terms and conditions to consider, such as potential withdrawal penalties in certain circumstances.

Innovative Finance Isas, meanwhile, enable investments to be made with businesses.

Rickman says that when choosing an Isa, “the best one for you will depend on your personal goals and risk appetite”.

Putting money into investments, rather than cash savings, does carry the risk of getting back less money than you paid in, although there may be bigger rewards – if it turns out that the investments perform relatively strongly over the longer-term.

Rickman says Junior Isas can be a great way to help children navigate the wave of financial challenges of early adulthood.

“While only a parent or guardian can open a Jisa for a child, anyone can contribute once the account is up and running,” he adds.

Potential returns and rates of interest will be something savers often weigh up when considering savings accounts, but something else to consider might be whether an account aligns with your values.

Roger Hattam, director of retail banking at Triodos Bank UK, says: “Whether you’re saving in a cash Isa, or investing in stocks and shares or innovative finance, your money won’t just sit there: it will be actively used by your bank to fund whichever businesses and sectors that bank sees fit.

“And this is where your choice really matters.”

He adds: “Even a small amount of money can make a huge impact when it’s being invested back into transformative projects that deliver measurable positive impact.”

Hattam suggests researching ethical campaigns and independent guides to find more sustainable and transparent savings products.