The Stocks and Shares ISA deadline is midnight tomorrow (5 April). Every year, UK investors have a use it or lose it £20,000 contribution limit. It’s a tax wrapper. With any gains made, HMRC won’t take a penny.
It tends to be the case around this time of year that investors enter panic mode. There’s lots of propaganda rushing people to invest their cash into stocks.
Last year, in the final hour of the tax year, Hargreaves Lansdown saw a Stocks and Shares ISA opened or topped up every 10.3 seconds. That’s astonishing.
With the deadline looming, I want to ensure I make the most of my tax-free allowance. That said, I don’t want to make any rash decisions.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
I’m taking my time
Luckily, I don’t have to. As long as cash is loaded into an ISA before the tax year ends, it’s considered part of the current year’s allowance.
But what does that mean? It means I can take the time to find the right investments that align with my strategy and long-term goals.
What’s better, some companies even pay interest on cash balances. So, while I decide where to invest my hard-earned money, I’ll be making an extra few pounds along the way.
One I’ve got my eye on
That’s good news. It allows me to delve into some research instead of hastily buying stocks without doing the proper due diligence.
Even so, I have a good idea of what companies I want to add to my holdings next. One is Lloyds (LSE: LLOY). Although it’s already a mainstay in my ISA, I’m looking to increase my position.
That’s partly because I’ve been inspired by ISA millionaires. There are over 4,000 in the UK. And at AJ Bell, Lloyds is one of the top five stocks owned by investors who have a million pounds or more sitting in their ISA. If it works for them, I hope it will work for me.
But it’s also because, at its current price of 53.4p, I see plenty of value in the FTSE 100 bank. At that price, it means it’s trading on just seven times earnings.
I also like its 5.3% dividend yield. That’s above the Footsie average of 3.9%. It’s covered two times by earnings, so the payout looks safe. That’s important given that dividends are never guaranteed. Through my ISA, it also means I’m exempt from dividend taxes.
Lloyds has its risks right now. It’s solely reliant on the UK for revenue. With sluggish growth forecast for the domestic economy, that doesn’t bode well. It’s also the UK’s largest mortgage lender, so I’ll be hoping the property market shores up in the times ahead.
In it for the long haul
But as interest rates begin to fall, I think that’ll happen. More widely, falling rates should provide investor sentiment with a boost. That could give markets a lift.
After years of suffering, I’m optimistic Lloyds shares are finding their feet. They’ve had a strong start to 2024. I’ll be adding the stock to my ISA with any cash I have. Safe to say, it’ll be staying in it for the years to come.
