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What is an ISA and how do I get one ?

If you pay income tax and have some spare money to save or invest you should know about Individual Savings Accounts (ISAs). ISAs have been available since April 1999, and they offer an attractive tax-free option to anyone aged 16 or over. Junior ISA’s (JISA’s) are available to those aged under 16.

ISAs have replaced TESSAs which in turn had replaced PEPs (Personal Equity plans)

What makes them different from normal savings accounts?
With standard bank and building society savings accounts, taxpayers normally have to pay tax on any interest earned on their money. The tax is deducted from the interest before it is paid out, reducing the amount received. Similarly, tax must be paid on the income and profits made from investments in the stock market, like company shares or unit trusts.
However, ISAs are a kind of 'wrapper' to protect savings from tax, allowing you to put away a maximum of £11,280 (by way of regular or single savings amounts) each tax year, in a range of savings and investments. You pay no personal tax at all on the income and/or profits received.

Tax savings
If you’ve taken full advantage of your allowance since ISAs began you’d have avoided a massive amount of your money from being taxed so far!
• You don’t pay any personal tax (income or capital gains) on any investments
• You don’t need to include the income and gains from ISAs on your tax returns
• You can take money out of your ISA at any time without losing your tax benefits

Taking out an ISA
ISA’s are readily available from all over the place. It is handy to get some advice on which type of ISA best suits you before you commit to one, as this could be the difference between a good return and a not-so-good return. The easiest thing to do is to talk to someone at your bank. They will be able to give you useful advice on your plan.

You can compare ISA’s online too, looking at different rates and fees associated with them, in order to make a self-informed choice on your plan.

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