Individual Savings Accounts (ISAs) are tax-efficient vehicles that allow you to save and invest without having to pay income tax or capital gains tax. They can be a good way for people to start saving or to add to their existing portfolio of savings and investments.
The ISA allowance for the 2017/18 tax year has risen from £15,240 to £20,000 in April 2017, offering a welcome additional incentive for savers – not only for existing ISA investors, but also for those who might be new to tax-free saving. You can also open a Junior ISA (JISA) for a child under the age of 18.
ISAs are provided by banks, building societies, asset managers, insurance companies, and the state-owned National Savings & Investments (NS&I). You can invest your entire ISA allowance into cash, stocks and shares, or any combination of the two. Moreover, you can transfer your ISAs between providers as often as they like (subject to your providers’ rules).
Even if you cannot afford to take advantage of the full annual ISA allowance, it is still worth saving what you can via a regular savings plan, which can start from as little as £50 a month. Do not forget one of the golden rules of ISA investing – if you do not use it, you lose it – so make the most of each year’s tax-free ISA allowance. Please note that levels and bases of, and reliefs from, taxation are subject to change.