ISA Allowance

ISA Allowance

The ISA Allowance changes annually.

1. The 2021-22 ISA allowance is £20,000 per person
2. You have until 5th April 2022 to make use of it
3. HMRC set the allowance every year based on the Consumer Price Index (CPI) as of September. 
4. The savings limit for Junior ISAs is £9,000
5. You can spread your ISA allowance between a Cash, Stocks and Shares or Innovative Finance ISA or simply place all your savings in to one of these types of accounts. You can only have one of each.

What kind of Cash ISAs are available?

Instant Access Cash ISA

This type of cash ISA allows you to withdraw your money quickly and easily whenever you need it.

Easy Access Cash ISA

This type of cash ISA allows you to withdraw money within set boundaries - for example, you may only be permitted to make a certain number of withdrawals per year.

Fixed Rate Cash ISA

This type of cash ISA is intended to provide a better rate of interest in return for locking you money away for a set period of time. 

However, this is not necessarily the case, so it pays to research all your cash ISA options before making a commitment as accessing your money quickly can be difficult

Structured Deposit ISA

This type of cash ISA allows you the potential to earn higher returns than you'd usually receive from savings in a regular instant access cash ISA or fixed rate cash ISA, without risking your capital.

Your capital is protected up to a value of £85,000 by the FSCS.

If your investment performs well, you'll receive your capital back at the end of the term plus any income you made on the initial deposit. 

In the event that your investment doesn't perform well you may receive no income or capital growth, but your initial capital will be repaid in full.

So, if you put £1,000 into a structured cash ISA and the market does well over the term of the ISA, you might get £1,000 capital + 15% income when your plan matures.

In the event that the market does badly, you may not receive any returns, but you'll get your capital back.

Who are Cash ISAs Useful For?

An instant access cash ISA offers straightforward access to emergency savings, while a fixed rate cash ISA can sometimes provide a better rate of return for those prepared to lock their money away for a set period of time. 

Structured deposit plans, which offer returns linked to the markets while also offering capital protection, are also becoming a popular way for people to use their cash ISA allowance.

As with all savings accounts, it's important that you shop around for the best deal.

For a selection of cash ISA options see our tables for latest products and options from leading market lenders.

Stocks and Shares ISA

A Stocks and Shares ISA is becoming a popular alternative to Cash ISAs now that the interest rates offered by banks are at the lowest they’ve ever been.

Generally, the returns on your investment are much higher in a Stocks and Shares ISA but there is an element of risk and there’s no guarantee that you won’t make losses or even withdraw less than you invested.

However, there are some way to minimise risk if you’re worried about investing:

1. Many providers now offer ready-made risk assessed portfolios, you can choose the risk level that you’re comfortable with
2. Many accounts mange your funds for you so you don’t have to
3. Investing in government bonds and property are less risky than investing in the stock market

While there are no guarantees of returns with investment, these are some sure ways to minimise that risk.