What is an ISA?
An Individual Savings Account (ISA) is a savings account that allows an individual to save cash or shares without being taxed on the return of interest and dividends. The savings accounts allow for up to £15,240 in a tax year to be saved.
Are You Allowed Multiple ISAs?
Yes, you are allowed multiple Individual Savings Accounts. However, you can only open one ISA per tax year. If you open an ISA on the 3rd March 2017, then you are unable to open another ISA until the 3rd March 2018.
Are All ISAs Tax Free?
All cash ISAs are tax-free. They avoid income tax and capital gains tax.
What Are the Types of ISAs?
- Cash ISAs
- Stocks and Shares ISAs
- Innovative Finance ISAs
What Are the Requirements for opening an ISA?
- be aged 16 or over for a cash ISA. Note that a junior ISA is available for anyone under the age of 18.
- be aged 18 or over to own a stocks and shares or innovative finance ISA.
- Live in the UK.
How Does Tax Work With Each ISA?
Cash ISAs do not require you to pay tax on the interest you earn over time.
Stocks and shares ISAs do not require you to pay tax on any return on investment you receive though the form of dividends.
When filling out a tax return, you do not need to declare any interest, capital gains or income from your ISA.
How Does the Savings Limit on an ISA Work?
The tax year runs from the 6th April to the 5th April. The annual limit for an ISA is £15,240, in the next tax year you are able to save another £15,240. There are two ways to save up to £15,240, you can use one type of ISA or split your investment between two or three different types of accounts.
For example, you could save £4,240 in a stock and shares ISA, £6000 in a cash ISA and £5000 in an innovative finance ISA in a tax year.
What Can Be Saved In Each Type of ISA?
In a cash ISA you can save:
Savings in building society and bank accounts
National Savings and Investments (specific products)
In a stock and shares ISA you can save:
- Company shares
- Corporate bonds
- Government bonds
- Government bonds
- Unit trusts and investment funds
In an innovative finance ISA you can save:
Peer-to-peer loans (loans between businesses that are not given to a bank)
Would you like to find out more about an ISA? Call 0131 496 051 for expert guidance, we can provide expertise and answer any questions you currently have.
Where and How Can I Open an ISA?
You can open an ISA from:
- building societies
- other financial institutions
- stock brokers
- credit unions
- friendly societies
- peer-to-peer lending services
You can find different information about different Individual Savings Accounts on the website of or in branch at the financial institution’s building. Prior to choosing a ISA provider you must research the data and deals associated with the ISA. You can compare interest rates and other details using online tools which help you to choose the most profitable ISA.
When Can Money Be Withdrawn From the ISA?
You are free to withdraw money form your ISA at any time. No tax benefits will be lost when withdrawing money. Be careful to check the terms of your ISA as their could could be a charge or a set if rules for taking out money.
What Is a Flexible ISA?
A flexible ISA is a special kind of ISA that only certain branches offer. It allows for money to be withdrawn and then put back in without disrupting your annual savings limit. You can check if your ISA is flexible by calling your providers help line or visit them in branch.
For example, if you put in £10,000 then withdraw £4,000 when your ISA limit is £15,240 then the amount you can now put in during the same year is £11,240 if you have a flexible account. If you do not then you can only put in £6,240 that same tax year.
What Advice Can I Receive When Choosing an ISA?
Still need more clarification regarding an Individual Savings Account? Then contact Windows Financial Services by calling 0131 496 051. If you are unable to call right now then arrange a date and time for when you have the opportunity to talk with us about any questions you have. Visit Contact to book an appointment or send questions via email: email@example.com.