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Poll question results- The benefits of having an ISA


In a poll ran by us here at we have found out that a massive 63% of people don’t have an ISA, or if they do have one, don’t regularly save into it. This is a great shame, because an ISA is a great, tax efficient way for adults and children to save money. You can open an ISA if you are over 16 and a resident in the UK, or a Junior ISA on behalf of your child if they are under 18 years old.

What is an ISA?

ISA stands for Individual Savings Account and is a tax efficient way to save or invest your money. Usually with savings accounts, you are required to pay income tax on whatever interest you may earn from your savings. For higher-rate taxpayers, this means not having to pay income tax at 40% on any savings interest, while for savers in the basic-rate tax band it provides a saving of 20%.
With an ISA, each year you are allowed to save up to the annual ISA allowance without paying any kind of tax.

What are the ISA allowances?

Each new tax year, which begins on the 6th April, you get a new ISA allowance. For this 2015-16 tax year the allowance is £15,240 for an ISA and £4,080 for the Junior ISA. This means you can save up to £15,240 tax free when saving into an ISA. You can also split this amount between stocks & shares and cash ISAs, or use the whole amount for either.
You must make sure that you invest all the money you were planning to by the 5th April for it to count for that year. Any unused allowance doesn't roll over - so if you don't use it, you lose it forever. You'll get a new allowance the next tax year, but won't be able to contribute anything to the old ISA.

What are the benefits of a cash ISA?

Cash ISAs can be offered by supermarkets, retailers, friendly societies, financial advisers and credit unions. There are many benefits of having one. These include:
• There are a large range of different ISAs that have been designed to meet your specific needs, such as Instant Access, Regular Saver and Fixed Rate.

• You can choose to have an online based or a branch based ISA

• You don’t have to pay any money to open a cash ISA

• Many cash ISAs come with bonuses

• Many ISAs offer the chance to “transfer in” so you can move your money from one ISA to another without losing the tax break

Withdrawing your money

You can take your money out of an ISA at any time, without losing any tax benefits. However, taking money out of your account doesn’t reset your tax-free ISA allowance. If you save up to your entire ISA allowance then withdraw some money, you can’t put anything else back into your ISA in that tax year.

What is a Junior ISA?

A Junior ISA is a tax efficient saving account created for children under the age of 18. It was introduced by the government to encourage children to save for their children’s long term future. Any child without a Child Trust Fund (CTF) under the age of 18 who lives in the UK can apply for one, but once a child is 16 they can transfer to a regular ISA (but will not be able to withdraw any money until they turn 18). If your child has a CTF, they can now transfer it to a Junior ISA.

The Junior ISA has a savings limit of £4,080, and a child can have either a stocks and shares Junior ISA, a cash Junior ISA or both.

So, what are you waiting for? If you don’t have an ISA but would like to start saving, speak to one of our financial advisers today. Why not take part in one of our free 30 minute health checks (link) to see if our full qualified advisers can find the best deal for you? You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.

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