What is an ISA?
Martin Lewis reminds LISA customers of withdrawal deadline
When you subscribe we will use the information you provide to send you these newsletters.Sometimes they’ll include recommendations for other related newsletters or services we offer.Our Privacy Notice explains more about how we use your data, and your rights.You can unsubscribe at any time.
An ISA is a type of savings product available in Britain. Billions of pounds are kept in individual savings accounts. In the last tax year alone, £67.5bn was saved by adults in Britain, an increase of £2.3bn compared with the previous year.
ISA rates are very low at the moment which means there are very few options available for savers to get high returns.
This method of saving was first introduced in 1999.
Around 11.2 million Adult ISA accounts subscribed to ISAs in 2018/2019.
ISAs are seen as a simple way to save tax-free, but there are many different types which can be confusing for many people.
What is an ISA?
An ISA is an account which allows you to save money tax-free in a cash savings or investment account.
ISA accounts are offered by banks, building societies, insurers, asset managers and National Savings and Investments (NS&I).
You can save up to a maximum limit each year into a cash ISA, including a Help to Buy ISA, a stock and shares ISA, an innovative finance ISA, a Lifetime ISA or a mixture of all of these.
You can put up to £20,000 in each tax year in ISAs without incurring taxes.
Lifetime ISA accounts can only be topped up with £4,000 each year.
But this does mean you can top up the remaining £16,000 into other ISAs.
You cannot exceed £20,000 but can split this amount into as many accounts as you wish.
Martin Lewis warns Lifetime ISA withdrawals must be made ASAP [INSIGHT]
ISA: Savers urged to watch out for ‘pitfalls’ as the deadline looms [EXPLAINER]
Tax year end: What to do before end of year – ISAs and Capital Gains [ANALYSIS]
What are the different types of ISA?
There are several different types of ISA including:
- Cash ISA
- Stocks and shares ISA
- Innovative finance ISA
- Help to Buy ISA
- Lifetime cash ISA
- Lifetime stocks ISA
- Junior cash ISA
- Junior stocks and shares ISA.
The table below breaks down the key terms and conditions for each of these different ISA accounts.
What are the benefits of ISAs?
When saving into an ISA, you will often find the amount you save on tax could outweigh the interest.
All your savings interest will remain tax-free.
You can invest in cash, stocks and shares and peer-to-peer lending.
You can usually withdraw money from your ISA without losing the tax benefit on the rest of your savings.
Who can open an ISA?
The eligibility rules for an ISA require you to be a resident in the UK or a Crown servant or spouse or civil partner of a Crown partner working in the UK.
You must also be:
- Aged 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.
Source: Read Full Article