My building society keeps emailing me to suggest I put money into an ISA before the end of the tax year, but I want to wait before deciding how much to put away, as I might need to call on my reserves if the pandemic worsens. I have £180,000 in a standard savings account. Should I do something with my money or wait? Why does the tax year-end matter?

Douglas Bridges of Smith & Pinching responds:

I understand your reluctance to lock money away in these uncertain times, but that doesn’t mean that you shouldn’t invest now for growth but still have access to at least some of your money for emergency purposes.

There are two principal types of ISA: Cash ISAs and Stocks and Shares ISAs. You can invest in either, or a mixture of both, up to the annual allowance, which currently stands at £20,000. Growth in ISAs is tax-free, however large your ISAs become. Some Cash ISAs allow you to invest up to your allowance now, withdraw as needed and top the account up to the allowance again within the same tax year. If you think this would be suitable for you, ensure that you choose an ISA that offers this flexibility.

Timing your financial transactions with the tax year-end on April 5 in mind can be important. Certain reliefs and allowances will be lost if you don’t use them in the tax year. These include the ISA allowance.

Clearly you can’t put all your current savings into ISAs in a single tax year, so a long-term plan is important. There are many other investment options to consider, but it’s critical that they are suitable for you and your circumstances.

Other potential strategies for your money might include making pension contributions. You can invest up to 100pc of your qualifying earnings in your pension. However, the most you can invest and still receive tax relief (called the Annual Allowance) is £40,000 per tax year. Particularly high earners and those who have started taking pension benefits have a lower allowance. Unused pension annual allowance can be carried forward for up to three years, but you must use the current year’s allowance first.

Choosing savings and investments should be done as part of a wider financial plan that identifies your targets and objectives and maps out a route to achieve them. My recommendation would be for you to undergo a full financial review before committing to any particular route so that you can put a plan together.

Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

For more information, please visit www.smith-pinching.co.uk