The amount of money a saver can contribute to their ISAs each year is affected by the current ISA allowance.
Adult Cash ISAs, Investment ISAs and the not yet launched Lifetime ISA all sit within the same overall contribution limit.
Junior ISAs have their own separate annual allowance.
The ISA allowance is the maximum amount you are allowed to invest each tax year across all of your ISAs, this means that if you have more than one type of ISA you will need to break your ISA allowance up across your ISAs to ensure that you do exceed the overall limit.
Each ISA may have their own additional specific limitations imposed by the provider such as a minimum investment amount.
The maximum ISA allowance is reviewed annually so make sure you’re always up to date with how much you can save.
If you want to move your money already in an ISA to another one, with either the same or a different provider, there is a specific way of doing so. This is because if you just withdrew money as cash and paid it in to another ISA this would count towards your allowance for that tax year and you would lose the tax-free benefits. This could be avoided by doing an ISA transfer instead.
You can transfer all or some of your ISA balances and you are permitted to transfer between different types of ISA such as from Cash ISA to a Stocks and Shares ISA or vice versa.
Thanks to recent guidelines, transferring an ISA from one provider to another is now a fairly straightforward process:
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.
While ISAs can be straight forward, there are some rules to follow and it’s useful to know before you get started:
The rules on ISAs have been relaxed since April 2016 and you can now choose how you split your savings.
This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.
Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.
22nd September 2020
The world of investments can be a bit overwhelming, especially for a first-time investor. So – to make your first dive into investing your hard-earned cash that little bit easier, we’ve put together a beginners guide for investment ISAs, giving you all you need to know.
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