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An ISA or individual savings account is a tax-efficient way to save or invest your money.
There are different kinds of ISAs you can put your money into. The main types are Cash ISAs,Stocks and Shares ISAs, and Innovative Finance ISAs. There are also Junior ISAs for those under 18 and Help to Buy ISAs for first-time home buyers. Since April 2017, there’s also a Lifetime ISA for people under 40.
A Cash ISA is like a bank current or savings account, but you don’t pay any tax on the interest you make. In a Cash ISA, your money will either grow at a fixed or variable rate of interest.
A Stocks and Shares ISA invests your money into a range of assets, such as shares, bonds and commodities. You don’t pay any income tax on any income or any capital gains tax on profits when you sell your ISA.This means that any growth on your investment is tax efficient.
But be aware that with a stocks and shares ISA you may get back less than you have invested.
The amount of money you can put into ISAs for a tax year is called the annual ISA allowance. For the 2017-18 tax year, the total amount is £20,000. Providing you do not exceed the allowance you can invest the whole amount into either a Cash ISA, Stocks and Shares ISA or Finance ISA or any mix of the three. Remember if you are contributing to an ISA you can only have one Cash ISA provider, one Stocks & Shares ISA provider and one Innovative Finance ISA provider in any one tax year. However, these can be different providers.
Yes, you can. You may want to get a better rate, or simply bring your money together so it’s easier to manage. Whatever the reason, in order to keep the tax benefits of an ISA it is important to transfer to the new provider. If you close the existing ISA or withdraw money from another ISA you would lose the tax benefits.
You have to be a UK resident and over 18 to invest in a Stocks and Shares ISA, but can put money into a Cash ISA from the age of 16. There is no minimum time you have to leave money in an ISA, you can take your money out at any time, however it is important to remember that most stocks and shares ISAs are designed to be held for the medium to long term, for example five years or more.
Royal London Marketing Limited is authorised and regulated by the Financial Conduct Authority. The firm is on the Financial Services Register, registration number 302391 and distributes the Royal London Investment ISA. Registered in England and Wales number 4414137. Registered office: 55 Gracechurch Street, London, EC3V 0RL.
The Royal London Investment ISA is provided by Investment Funds Direct Limited (IFDL). IFDL is authorised and regulated by the Financial Conduct Authority. The firm is on the Financial Services Register, registration number 114432. Registered in England and Wales number 1610781. Registered Office: Trimbridge House, Trim Street, Bath, BA1 1HB.