Use your ISA Allowance

Statistics show many young people are not using their ISA allowance. Only 17% of ISA savers are under the age of 35 but half of ISA savers are aged 55. So, what are the options for ISA savers?

An ISA is an Individual savings account. It allows you to save tax-free in a cash or investment account.

Cash ISA
A Cash ISA is a savings account where you can deposit up to a yearly limit to save tax-free. There are three principle types, Instant Access, Regular Savings and Fixed rate. Anyone over the age of 18 can open one cash ISA in each tax year. Although Cash ISAs can be a good option to start your investment journey they can have drawbacks. Low interest rates and high inflation can lead to poor rates and eroding value.

Stocks and shares ISA
A stocks and shares ISA can help make your money work harder. Unlike a cash ISA, a stocks and shares ISA gives your money more potential to grow by investing it in a range of things such as stocks or bonds, instead of keeping it in cash. It’s a smart way to protect your money from the tax man, as you won’t pay a penny in capital gains tax or income tax on any profits you make in the future. So, whether you’re saving for a holiday of a lifetime, a property deposit or simply for a rainy day, switching to a stocks & shares ISA could give your savings the boost they need to meet your financial goals.

Don’t forget to use your 2019-2020 allowance before the end of 5 April 2020.

2019-2020 2020-2021
Total ISA limit £20,000 £20,000
Lifetime ISA £4,000 £4,000
Junior ISA and Child Trust Fund £4,368 £9,000

An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

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