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Individual Savings Accounts (ISAs) are a way of saving and investing without paying any tax on the returns you make. ISAs were launched in the UK in 1999 to encourage people to save.
They allow you to earn interest on your savings without paying tax on it, and to invest in stocks and shares without being liable for tax on any returns you make.
ISAs were introduced to replace Personal Equity Plans (PEPs). Initially savers had the option of a mini ISA, which allowed investments in either cash or stocks and shares, or a maxi ISA, which combined both elements in one account.
The two current types of ISA , cash ISAs and stocks and shares ISAs, which replaced the mini and maxi ISAs in 2008. There are also innovative finance ISAs which involves lending to small business and the lifetime ISA. The lifetime ISA can help you save for a new home or your retirement and offers government bonuses to help you reach your goal.
For UK residents, ISAs are an excellent way of saving - in fact, they should be your first savings port of call in order to avoid paying tax unnecessarily on your investments.
Whether you've a particular savings goal in mind or you just want to ensure you've got an emergency fund tucked away, an ISA can provide a simple way to help achieve this.
There are many ISA’s to choose from so it’s easy to be left wondering which ISA is right for you. Comparison tables can be a great way to start. Follow the links provided to find more information on any of the products mentioned on our tables.
When choosing an ISA, there are a number of things to consider. We’ve highlighted some of the most important factors below:
This depends on your savings goal and the amount or risk you’re willing to take. It’s generally advised that if you have debts, don’t have any other form of savings or will need to withdraw your cash in an emergency then you shouldn’t invest as your capital is at risk. It’s also difficult to withdraw your money quickly as you will need to sell your assets, even transferring can take 30 days or more.
If you do have some spare income, however, investing is a good way to see high returns on your money, as long as you are aware of the risks.
As another option, with certain types of Cash ISAs, you have instant access to your money, which makes it a flexible way to plan your finances. Alternatively, fixed rate ISAs are a good way to see guaranteed returns on your capital, if you can tie up your money for a year or more.
Your existing ISA manager cannot stop you transferring, but they may charge you for it. However, this is becoming less common, particularly with cash ISAs. You should contact your current ISA provider and confirm their policy on this before making a decision.
The rules on ISAs have been relaxed since April 2016 and you can now choose how you split your savings. While ISAs can be straight forward, there are some rules to follow and it’s useful to know before you get started:
It’s also important to remember that ISA allowance limits apply to everyone on an individual basis, so if you’re married or in a relationship, you can both hold your own ISA, each with the full allowance. This can make them an excellent way to save for large expenses such as a property, a holiday or a new car.
It’s looking more and more likely we’re past the worst of the pandemic.
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The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice.
Save for your first home and retirement
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15th March 2021
You've decided to invest your savings into a Stocks and Shares ISA. You'll be using your tax-free ISA allowance for this year before the deadline, while also investing your money for your future. But what do you need to consider before opening an account? We've put together a list of our top five considerations for you to think about before you click "apply".
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