![]() ![]() It is not intended to be, neither does it constitute, any form of tax advice. The content in this article is provided for information purposes only. ![]() Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. Even though I won’t be able to hit the magic number of £1,666 in the immediate future, it’s definitely a realistic goal I can work towards. I’m going to try and do this via reducing my expenses, as well as putting more money in dividend stocks. The bottom line for me is to focus on growing my investment amount each month. ![]() This can slow my progress towards my goal. There’s a lot that can change further down the line that can mean my income isn’t as much as I’d expect it to be. Yet this is a good thing, as it means my ISA allowance can be larger.įorecasting the future dividend payments is very difficult. I then take this £1,100, club it together with my new money and invest £1,600 for the month.Īs a side note, dividend income received within the ISA doesn’t count towards my £20k allowance. In years to come, I could reach the stage whereby I only invest £500 of my own fresh money, but receive £1,100 of dividend income from my long-term portfolio. This naturally increases year-by-year as I invest more. If I divert all of this to income stocks with an average yield of 7%, I’ll make around £420 a year. Let’s say I invest £500 a month at the moment. I can then take this money and use it towards my goal of investing £20k. So if I put my fresh cash into income stocks, I’ll receive the gross payment amount. One of the benefits of my ISA is that I don’t pay dividend tax. Granted, that may seem like an oversimplification! If I can’t do the above, I can make the most of my current contributions. So if I can reduce my costs or am fortunate enough to increase my pay, I’ll benefit from having more money left over at the end of the month. In a similar way to a business, my income minus expenses each month leaves me with either retained earnings or a deficit. It revolves around my income and expenses. The first way I can increase my investment amount has nothing to do with what I invest in. Yet the whole point is to try and build up to a level whereby I can hit this amount at some point during the future. Even for the 2023/24 ISA year, I’ll struggle. To begin with, I have to admit that I won’t be anywhere close to maximising my £20k allowance for this current year. Here’s how I’m trying to do just that! Managing my finances If I break this down to a monthly target, I want to try and reach a stage where I can invest £1,666 each month to maximise my potential. This is sheltered from capital gains tax and dividend tax. In April, the allowance resets, meaning that I then have the next year to invest up to £20k in the ISA. We’re now less than two months away from the annual Stocks and Shares ISA deadline. ![]()
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