Individual Savings Account's (ISA's)

You can save tax-free with Individual Savings Accounts (ISAs). In the 2018 to 2019 tax year, the maximum you can save in ISAs is £20,000. There are 4 types of ISA: cash ISAs stocks and shares ISAs innovative finance ISAs Lifetime ISAs You can put money into one of each kind of ISA each tax year. Who can open an ISA You must be: 16 or over for a cash ISA 18 or over for a stocks and shares or innovative finance ISA 18 or over but under 40 for a Lifetime ISA resident in the UK a Crown servant (for example diplomatic or overseas civil service) or their spouse or civil partner if you don’t live in the UK You can’t hold an ISA with or on behalf of someone else. You can get a Junior ISA for children under 18.

They are now a permanent feature of the savings landscape.

How ISAs work

  • There are 4 types of Individual Savings Accounts (ISA): cash ISA stocks and shares ISA innovative finance ISA Lifetime ISA You don’t pay tax on: interest on cash in an ISA income or capital gains from investments in an ISA

    If you complete a tax return, you don’t need to declare any ISA interest, income or capital gains on it. Putting money into an ISA Every tax year you can put money into one of each kind of ISA. The tax year runs from 6 April to 5 April. You can save up to £20,000 in one type of account or split the allowance across some or all of the other types. You can only pay £4,000 into your Lifetime ISA in a tax year.

    Example: You could save £15,000 in a cash ISA, £2,000 in a stocks and shares ISA and £3,000 in an innovative finance ISA in one tax year.

    Example You could save £11,000 in a cash ISA, £2,000 in a stocks and shares ISA, £3,000 in an innovative finance ISA and £4,000 in a Lifetime ISA in one tax year.

    Your ISAs won’t close when the tax year finishes. You’ll keep your savings on a tax-free basis for as long as you keep the money in your ISA accounts. What you can include in your ISAs Cash ISAs can include: savings in bank and building society accounts some National Savings and Investments products Stocks and shares ISAs can include: shares in companies unit trusts and investment funds corporate bonds government bonds

    You can’t transfer any non-ISA shares you already own into an ISA unless they’re from an employee share scheme. Lifetime ISAs may include either: cash stocks and shares Innovative finance ISAs include: peer-to-peer loans - loans that you give to other people or businesses without using a bank ‘crowdfunding debentures’ - investing in a business by buying its debt You can’t transfer any peer-to-peer loans you’ve already made or crowdfunding debentures you already hold into an innovative finance ISA.

  • How to open an ISA You can get an Individual Savings Account (ISA) from: banks building societies credit unions friendly societies stock brokers peer-to-peer lending services crowdfunding companies other financial institutions Contact your provider directly for more information about how to open an ISA with them.

  • Withdrawing your money You can take your money out of an Individual Savings Account (ISA) at any time, without losing any tax benefits. Check the terms of your ISA to see if there are any rules or charges for making withdrawals.

    There are different rules for taking your money out of a Lifetime ISA If your ISA is ‘flexible’, you can take out cash then put it back in during the same tax year without reducing your current year’s allowance. Your provider can tell you if your ISA is flexible. Example Your allowance is £20,000 and you put £10,000 into an ISA during the 2017 to 2018 tax year. You then take out £3,000.

    The amount you can now put in during the same tax year is: £13,000 if your ISA is flexible (the remaining allowance of £10,000 plus the £3,000 you took out) £10,000 if your ISA is not flexible (just the remaining allowance)

  • Transferring your ISA You can transfer your Individual Savings Account (ISA) from one provider to another at any time. You can transfer your savings to a different type of ISA or to the same type of ISA. If you want to transfer money you’ve invested in an ISA during the current year, you must transfer all of it.

    For money you invested in previous years, you can choose to transfer all or part of your savings. If you transfer cash and assets from a Lifetime ISA to a different ISA before the age of 60, you’ll have to pay a withdrawal fee of 25%. Restrictions on what you can transfer You can transfer cash from your innovative finance ISA to another provider - but you may not be able to transfer other investments from it. Check with your provider for any restrictions they may have on transferring ISAs. They may also make you pay a charge.

    How to transfer your ISA To switch providers, contact the ISA provider you want to move to and fill out an ISA transfer form to move your account. If you withdraw the money without doing this, you won’t be able to reinvest that part of your tax-free allowance again. Deadlines and complaints ISA transfers should take no longer than: 15 working days for a cash ISA and a cash Lifetime ISA 30 working days for a stocks and shares ISA, investments held in an innovative finance ISA and stocks and shares in a Lifetime ISA




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