Free 2013 - 14 ISA allowance guideFind out everything you need to know about saving or investing into an ISA. Download your free ISA allowance guide for the 2013-14 tax year.
Free ISA Savings GuidesOur FREE guides explain how ISAs could help you pay less tax, where to start and how to achieve better returns. Download your FREE guide today with no obligation.
Free Guides to Savings for ChildrenThe new tax efficient way to save for your children. With more financial pressure saving for children is a useful way to build a nest egg. But how does it work, how much could you afford to save?
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Interest you earn from a savings account is subject to income tax. Depending on your income tax banding, up to 50% of any interest you earn goes straight to the taxman!
But cash ISAs are different…
ISA is short for an “Individual Savings Account”. Unlike normal savings accounts or investments, interest earned from a cash ISA is completely tax-free. The higher the rate of tax you pay, the more beneficial a cash ISA will be compared to a normal savings account. This table shows the rates you’d need to match a cash ISA with a non-ISA savings account:
Additional Rate Taxpayer (50%)
Cash ISAs can only have a maximum amount paid into them in each tax year (which runs between 6 April and the following 5 April).
In the 2013-14 tax year the Cash ISA allowance is £5,760.
You must pay your money in before 5 April 2014, to make the most of your 2013-14 ISA limit. If you don’t use it, you lose it!
If you also have an investment ISA, you may not be able to put this much into your cash ISA. Read our ISA guide to find out more, including the limits for investment ISAs and how you can split your money between investments and cash.
You can transfer your existing cash ISA, without losing the tax-free privileges. The two main reasons you’d do this are to: