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Individual Savings Accounts - ISAs

Keep your money from the taxman by saving in an ISA. You can invest up to £15,000 in a cash ISA, a stocks and shares ISA, or a combination of the two.

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Save an extra £150 when you max your ISA

ISAs can really boost your saving power

If you use ISAs wisely, you can put away up to £15,000 without having to pay a penny of tax on the interest you earn*
*Tax advantages may be subject to change and will depend on your individual circumstances.

Stocks and Shares ISAs

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You can invest your full ISA allowance of £15,000 in a stocks and shares ISA. Stocks and shares ISAs come in two forms:

Stocks & Shares ISA Direct Providers

Direct ISA products usually track performance of stock markets, like the FTSE 100, or are a basket of investments managed by a provider. Either way, the idea is you don’t need to be actively monitoring things every single day. Remember the capital is not protected so there is still a risk that you may not get back as much as you have paid in.

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Self-selected fund ISAs

These ISAs give you an empty 'tax wrapper' which you can fill with investments of your choosing. Great if you want to be in control of exactly which investments you make. These can be a higher risk investment and as with Pre-selected ISAs the capital is not protected so there is a higher risk you may not get back as much as you have paid in. These plans tend to be more suited to experienced investors who are willing to take greater risks.

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Cash ISAs

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You can put up to £15,000 in a cash ISA and shield your returns from tax.

Instant Access Cash ISAs

Simple accounts, quick access to your money 

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Save for your children's future

Save up to £4,000 a year with a tax-free junior ISA savings account.

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A Cash ISA (Individual Savings Account) is special type of savings account where you don’t pay tax on the interest you earn.

Individual Savings Accounts were introduced by the government in 1999 to encourage people to save. The government decides how much you are able to invest in an ISA each tax year.

In the 2014-15 tax year, for example, the limit is £11,880 per person. The ISA limit is expected to be raised in line with inflation each year from next year onwards.

Each UK taxpayer’s overall ISA limit can split between Cash ISAs and Stocks and Shares ISAs. For the 2014 – 15 tax year, the overall limit is £11,880 and so if you invested £8,000 in a Stocks and Shares ISA you would only be able to invest the remaining £3,880 in a Cash ISA.


Cash ISAs typically give you a better return on your savings than a non-ISA account because of their special tax-free status. A basic-rate (20%) taxpayer would have to find a non-ISA account paying 3.75% to get the same return after tax as a Cash ISA paying 3%.

At the higher tax rate of 40%, you’d have to find a non-ISA account paying 5% to match the Cash ISA, and those in the 45% tax band would only be able to match the returns of a 3% Cash ISA with a 6% non-ISA account.

According to research, if a higher-rate taxpayer had invested their entire Cash ISA allowance each year since ISAs were introduced, and moved their money to the highest-paying account each year, they would be almost £6,000 better off than if they’d used a standard savings account. In the 20% tax bracket, a saver would have been £3,000 better off.

Another great thing is that on top of the yearly limit, you can also transfer money invested in previous years.

Cash ISAs, like standard savings accounts, come in various forms – from easy access and fixed rate bonds to regular savers accounts. You must be 16-years-old and above to open a Cash ISA.

As long as your ISA is easy access, you’ll be able to withdraw your money. However, if you used 90% of your Cash ISA allowance and later withdrew £2,000 within that tax year – you’d still only be allowed to invest the remaining 10% of your allowance.

If you pay income tax then a Cash ISA is likely to be the best investment option for you, but you should always check what other accounts are available to see if there is anything to better suit you.

Remember that Cash ISAs are capped each year, so if you’re looking to invest more than the limit you might want to look at other options.

Each account will come with its own terms and conditions too, placing restrictions on transfers, deposits and withdrawals. For example, not every account will allow you to make transfers into it, and the accounts offering the highest returns are typically only going to be available for that year’s allowance.

If you’re planning on switching ISA accounts, you should be aware that when you withdraw the cash it loses its tax-free status, and so you should speak to your provider about arranging the transfer instead, or face losing your tax advantage.

If you are looking to invest money in both a Cash ISA and a Stocks and Shares ISA, you should know that while you can move cash from your Cash ISA to a Stocks and Shares ISA, you cannot move money in the opposite direction, from Stocks and Shares to Cash ISAs.

Investment-based ISAs like Stocks and Shares ISAs are a special way of growing your money in a savings account where you don’t pay tax on the interest your money earns.

Every year, the government decides how much every UK taxpayer is allowed to invest in ISAs. For the current tax year that limit is £11,880 and can be split between Cash ISAs and investment ISAs.

With Cash ISAs, you invest money in the account and receive a return based on that account’s interest rate. With Stocks and Shares ISAs, however, you can put your savings into a range of investments without having to pay tax on the profits you make.

Investment opportunities include unit trusts, open ended investment companies (OEICs), exchange traded funds, investment trusts and individual shares and bonds.

The major difference between the two types of ISA comes down to risk. Unlike using a Cash ISA, there is an element of risk involved when using a Stocks and Shares ISA. Though the value of your investment can increase, it can also decrease depending on the stock market – meaning you could (in theory) be left with less than you originally invested.

This might sound like an unnecessary risk, but the potential returns can be greater than those of a Cash ISA.

You can put more than half of your overall ISA limit into a Stock and Shares ISA, but it will of course reduce the amount you can put into a cash ISA. For example, if you invest 70% of your overall allowance in a Stocks and Shares ISA, you can then only invest 30% of your overall allowance in a Cash ISA.

The government allows you to put more than half of your overall ISA allowance in Stocks and Shares because it wants to encourage more people to invest in equities.

Over time, investing in equities typically gives higher returns than cash does, and so the more people invest in equities, the less reliant they’ll be on the state.

So, as you can imagine, Stocks and Shares are generally only advised to those who want to invest money over a longer period of time. Financial advisors recommend that only those looking to invest for at least five years.

The idea is that over five years, you stand a better chance of riding out the stock market if your investment does dip, so that you end the account in profit. Of course this isn’t guaranteed, so if you’re risk averse then Stocks and Shares ISAs might not be the right option for you.

The degree of risk also depends on the types of investments available within the Stocks and Shares market, some are riskier than other, but could potentially result in greater returns.

If you want to limit the risk of investing in Stocks and Shares ISAs, you can spread your money across several investments, thus spreading the potential risk.

If you’re new to Stocks and Shares you might be advised to start with relatively safe investments to help you build confidence before diversifying your portfolio into more adventurous funds.

There are relatively cheap ways to invest in equities, such as index tracker funds. These ‘passive funds’ aren’t run by a manager but are instead linked to the stock market index and automatically invest your money in every company within the index.

†Saving based on interest paid on the market leading product vs. average rate on offer in the UK; and based upon using the full 2011-2012 Cash ISA allowance of £5,340.