ISA stands for Individual Savings Account. If you’re a taxpayer and looking for a savings product that won’t charge you tax on any interest accumulated each year, Cash ISAs work well. In comparison, most ordinary bank and building societies savings accounts will require you to pay tax on interest earned.

How do they work?

Cash ISAs are pretty straight forward and no different to regular savings, instant access or notice accounts. They are simply a tax-efficient wrapper for cash deposits, enabling you to save without paying tax on the growth of your savings. Available from most banks, building societies and investment companies, the benefits to taxpayers include:
•    Higher interest rates.
•    No tax deducted on interest paid
•    Quick access for short-term savers without losing the tax relief.
•    Much lower risks than other investment channels

Are there any limits?

You must be aged 16 or over to open a Cash ISA. It is important to note that there are maximums that can be saved in any one tax year. 
 
Things to remember:
1. No notice, penalty free Cash ISAs may not offer the highest interest rates.
2. Some high rates only apply to savers who deposit the full amount into Cash ISA.
3. If you decide that you would like to invest in stocks and shares as well as cash deposits, you can open a stocks & shares ISA, which allows you to invest, less the amount in your Cash ISA, in any one tax year.
4. Once you’ve set up an ISA, it is possible to move it. But make sure you follow set procedures or you could lose the tax benefits.

Are Cash ISAs suitable for everyone?

Non-taxpayers, particularly young people and children may find traditional savings accounts offer them better interest rates. You’ll need to register for gross interest by filling in an R85 form, available from your saving provider or tax office.

Junior  ISA’s

Junior ISAs are long term, tax-free savings accounts for children.

Who can get a Junior ISA 

Your child can have a Junior ISA if they:
are under 18
live in the UK
* note - they cannot have one if they have a Child trust Fund

How Junior ISAs work

There are 2 types of Junior ISA:
a cash Junior ISA, i.e. you won’t pay tax on interest on the cash you save 
a stocks and shares Junior ISA, i.e. your cash is invested and you won’t pay tax on any capital growth or dividends you receive
 
Your child can have 1 or both types of Junior ISA.
 
To discover more about ISAs or to talk over other tax-efficient savings options if you’re ISA limit has been reached, contact us today.
 
The Financial Conduct Authority does not regulate deposit accounts.
 
Equity investments do not afford the same capital security as deposit accounts.  The value of an investment can go down as well as up, you may not get back the amount originally invested.