- What are ISAs?
Individual Savings Accounts (ISAs) were introduced by the government as a way of encouraging individuals to save. previously known as PEPs and TESSA's, ISAs provide a tax-free incentive, allowing you to earn interest without having to pay tax on it, unlike other investments held outside an ISA wrapper that are subjected to income or capital gains tax.
With standard savings accounts, higher-rate taxpayers lose 40% on any savings interest to the tax-man (50% for those earning over £150,000), while those in the basic-rate tax band lose 20% (10% for anyone earning under £2,560). Therefore, if you are a taxpayer, making use of your annual ISA allowance can be very rewarding, and by comparing the market to find the best ISA rates, 2011 will be a good tax year for your wallet.
- How do ISAs work?
Each tax year (running from April to April), everyone living in the UK is entitled to a £11,280 ISA allowance which can be split up between a cash ISA and stocks and shares ISA (which increased from £7,200 in April 2010).
The maximum amount that can be put into a cash ISA within any one year is £5,640, however you can use up to your full £11,280 allowance solely for a stocks and shares ISA, without paying any tax on the returns you gain.
You can only open one cash ISA, and one stocks and shares ISA each tax year, but it is possible to move balances from existing ISAs into another ISA, as long as the new account provider allows transfers, and the transfer is carried out by the bank.
- Where do I go to open an ISA?
If you're looking for somewhere to make use of your ISA allowance it is worth comparing different providers to find the best ISA rates. At Which4U, we compare ISAs from a wide range of providers, helping you to see which accounts offer the best ISA rates, and which account would best suit your savings needs. Whether you're looking for an ISA that rewards you for leaving your money untouched, or you require instant access to your account, we have something for you.
Something to remember when using this type of savings vehicle is that like standard savings accounts, ISA providers often pay high introductory rates lasting for the first 12 months from opening the account, so don't be shy to keep on-top of the best rates on offer and make the most of your savings.
- What are investment ISAs?
Stocks & shares ISAs are a great alternative to their cash counterparts for those that wish to see their savings more as an investment. There are a number of options to choose from, each carrying a different level of risk together with various possible returns offered. These types of ISAs to provide the potential to earn much higher returns, but the reason for this is that the risk element is introduced, so it's up to you to decide whether you are happy with this.
If you're interested in this savings concept then apply online today and make your savings work harder for you!
