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Highlights
- Individual Savings Accounts are tax-free saving and investment accounts for UK citizens.
- For the tax year 2021-22, the maximum allowance is £20,000 that you can save within the tax-free wrapper.
- There are four types of ISAs: Stocks and shares ISAs, Cash ISAs, Innovative Finance ISAs, and Lifetime ISAs.
Individual Savings Accounts (ISAs) are tax-free saving and investment accounts. For the tax year 2021-22 the maximum allowance is £20,000 that you can save within the tax-free wrapper. The same limit has been set for the tax year 2022-23. It was established to encourage Britons to save more each year. In case, an individual doesn’t use his annual ISA allowance before the end of each tax year, they won’t be able to use it next year.
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Eligibility for ISA
A person must be a resident of UK, a crown servant, or their spouse or civil partner if the person is not UK resident.
There are four types of ISAs:
- Stocks and shares ISAs
- Cash ISAs
- Innovative Finance ISAs
- Lifetime ISAs
The Cash ISA can be opened by a person aged 16 or over, for Stocks and Shares, Innovative Finance ISA and Lifetime ISA age limit is 18 or over. However, these accounts can’t be opened for children under 16. Instead, one can opt for a Junior ISA on behalf of their child under 18, with an allowance of £9,000 for the tax year 2021-22.
The different ISA accounts have a different maximum allowance, withdrawal restrictions and invest across different assets according to your risk-taking capacity.
Also Read: Which are best stocks and shares ISA for 2022?
What is Cash ISA?
A cash ISA is a saving account for which one does not have to pay tax on the interest earned. Taxpayers can earn £1,000 of savings interest a year without having to pay any tax on Cash ISA. If the taxpayer is earning over £150,000, they won’t get any allowance on Cash ISA.
A person can only open one Cash ISA in a year but may choose to transfer to another Cash ISA or a Stock and Shares ISA with another provider during the tax year. There are four types of Cash ISAs as per your saving goals. It includes Fixed-rate cash ISAs, Regular cash ISAs, Notice cash ISAs, and Instant-access cash ISAs.
Best cash ISAs and deals
- Shawbrook Bank’s Easy access savings accounts
The Shawbrook Easy access savings accounts allow holders to withdraw money whenever they want while earning a variable interest rate of 0.67%. If one is a regular saver, they may choose to deposit extra funds too. One can for monthly or yearly interest. The account requires a minimum opening balance of £1,000. A sole account holder may deposit a maximum £85,000 and joint account holders may deposit a maximum £170,000. The account does not have any limit on the number of withdrawals and no notice is required to withdraw funds. The minimum an account holder can withdraw is £500 at a time.
© 2022 Kalkine Media®
Also Read: Why work from home tax relief is being reviewed?
- Skipton building Society’s Cash eISA Saver Issue 11
The Skipton Building Society’s Cash eISA Saver Issue 11 offers a variable rate of interest that can go up or down, flexible access to money without affecting ISA allowance and the ability to transfer in ISA savings from previous tax years. The account can be opened and managed online and is available only to UK residents aged 16 or over. An account holder can deposit up to the total ISA allowance each tax year plus any ISA transfers, up to a maximum of £1 million.
In this, a joint Cash eISA saver Issue 11 account is not allowed. The holder can withdraw money online without any notice or penalties. For security reasons, one can’t withdraw or close it within 14 days after receiving the account’s first payment.
- Coventry Building Society’s one-year fixed rate ISA
The Coventry Building Society’s one-year fixed rate ISA offers 1% fixed rate interest annually with a deposit limit of £1-£20,000, depending on how much money you have already paid in other types of ISAs. After the 14-day cancellation period, holders can’t withdraw their money before 31 May 2023 and may close or transfer the ISA before 31 May 2023.
But Coventry charges the equivalent to 120 days’ interest on the account balance. Account holders can close the ISA and keep the money tax-free by moving the money to another ISA with Coventry or another provider.
- Coventry Building Society’s two-year fixed rate ISA
The Coventry Building Society’s two-year fixed rate ISA offers 1.20% fixed rate interest annually with a deposit limit of £1-£20,000, depending on how much money you have already paid in other types of ISAs. After the 14-day cancellation period holders can’t withdraw their money before 31 May 2024 and may close or transfer the ISA before 31 May 2024, but Coventry charges the equivalent to 180 days’ interest on the account balance.
Account holders can close the ISA and keep the money tax-free by moving the money to another ISA with Coventry or another provider, using an ISA transfer.
Also Read: 5 key personal finance tips for 2022
Coventry Building Society’s three-year fixed rate ISA
Interest Rate- 1.40 % Tax-free pa/AER
The Coventry Building Society’s three-year fixed rate ISA offers 1.40% fixed rate interest annually with a deposit limit of £1-£20,000, depending on how much money you have already paid in other types of ISAs. After the 14-day cancellation period holders can’t withdraw their money before 31 May 2025 and may close or transfer the ISA before 31 May 2025, but Coventry charges the equivalent to 180 days’ interest on the account balance.
Account holders can close the ISA and keep the money tax-free by moving the money to another ISA with Coventry or another provider, using an ISA transfer.
