Twelve working days to go

We are getting very close to the end of the tax year. Anything done in the next 12 working days falls within the 2012/13 Tax Year. After that we are looking at the new tax year.

Last year I wrote about the importance of using your ISA allowance. It’s probably worth re-reading it because nothing has changed. It was titled, That is illogical captain.

ISAs are flexible. Unlike products which lock you into high fixed monthly savings, ISAs are a tax-free wrapper into which you can invest spare cash as it becomes available. You can choose from the discipline of investing a low-ish amount each month, but you can also enjoy the freedom of being able to supplement your account whenever you want.

ISAs are transferable, helping investors to take advantage of lower-cost offerings. We constantly use the best product on offer at the time – but the ability to easily switch to a better one is a real boon. Costs matter, and the lower the cost of the wrapper, the better for you.

Government policy is ISA-friendly. You don’t need me to tell you that the government seems determined to re-write the pensions rule book every year. Changes to the ISA regime have been far less frequent – and on the whole, favourable to investors. You can’t say that for pensions. Saving for retirement? More and more, ISAs make sense.

ISAs make a very good place to hold shares. Freedom from higher-rate tax on dividends, for sure. But also freedom from Capital Gains Tax – and the torturous calculations which investors have to perform in order to calculate their Capital Gains Tax liability. Heck, you don’t even have to report ISA income on your tax return.