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ISA Fact Sheet

ISA Fact Sheet

Category: ISAs

Updated: 11/01/2017
First Published: 09/07/2014

ISA may sound simple enough, but it can sometimes be difficult to know where to start, so we wanted to make things a bit easier for you. Here's a short fact sheet on ISAs to give you a quick overview of what these nifty little accounts are.

  1. ISA is short for Individual Savings Account.
  2. ISAs give you the chance to save money in a dedicated account with any returns being entirely free from tax, so you don't have to give anything to the taxman.
  3. There are three main types: a cash ISA (with any savings being held in cash), a stocks & shares ISA (where you make active investments in the stock market) and an Innovative Finance ISA (that allows you to lend/invest via a peer-to-peer website).
  4. You can save up to £15,240 in an ISA in the 2016/17 tax year, split between the three ISA types in any combination you wish, and if you don't use it you lose it!
  5. You can only have one active cash ISA and one stocks & shares ISA in a single tax year, i.e. one version of each that you can pay money into. However, you can have as many pots from previous years as you like.
  6. Cash ISAs have the guarantee that you'll never be left with less money than you paid in (subject to staying within the Financial Services Compensation Scheme limit). Stocks & shares ISAs don't offer this security and are instead seen as a riskier investment, as is the case for investments held in an Innovative Finance ISA.
  7. An ISA can only be opened in a sole name and you'll need to be at least 16 years old to have one (or 18 if you want a stocks & shares version).
  8. All ISAs must allow you to make transfers out but not all will let you transfer in money you have previously saved with other providers.
  9. If you are aged 16 or 17 you get a Junior ISA allowance of £4,080 in the 2016/17 tax year and an adult cash ISA allowance of £15,240 (but you won't be able to have a stocks & shares ISA until you're 18).
  10. Depending on your tax status, as it stands, up to 45% of the interest you earn could be taken by the taxman on a regular savings account – unless you qualify for a Personal Savings Allowance – but not with an ISA.

An ISA is all about making your money work harder for you by keeping it in a tax-efficient wrapper. Find out more about ISAs by reading our comprehensive guides, or if you're ready to invest then check out our best buy tables to find the top rates.

What Next?

Find a home for your 2016-17 cash ISA allowance

Want to decide for yourself which savings account is the best? - use our Savings Search

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

 
 
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