What is an ISA?
Individual Savings Accounts (ISAs) explained
Individual Savings Accounts (ISAs) are a simple way of making tax-free savings. The Government introduced ISAs in 1999 to encourage people to save for the future, which is why they give you such generous tax breaks – your savings grow free from Income Tax and Capital Gains Tax. Every year you get an ISA allowance, which is the maximum amount of money you can pay into your account. This year’s allowance (2016/17) is £15,240.
Stocks & Shares ISAs or Cash ISAs?
You can invest your entire £15,240 allowance into a Stocks & Shares ISA, a Cash ISA or a combination of both. Cash ISAs offer you either a variable or fixed rate of interest. Variable rate ISAs are usually instant access with fixed rate ones usually over a minimum period of time. Fixed rate ISAs give you the security of a guaranteed return, although your money is tied up for the duration and you will normally be charged or lose part of your interest for early withdrawals.
Conversely, Stocks & Shares ISAs let you invest your savings in the global stock markets. This means you get more control over where your money is invested and how much risk you are exposed to, although of course your capital is at risk. However, if you’re saving for the long term Stocks & Shares ISAs do have the potential to deliver significantly higher returns on your investment than Cash ISAs.
Your 2016/17 ISA allowance
Every year you get an ISA allowance, which is the total amount of money you can pay into an ISA. You cannot roll over your allowance from one year to the next, so if you don’t use it before 6 April you lose it and will miss out on generous tax relief. This year’s ISA allowance is £15,240 for adults and £4,080 for children (in Junior ISA accounts).
More information on ISA allowances
Can I transfer from one ISA provider to another?
It is easy to transfer from one provider to another if you are unhappy with your level of service, would like to consolidate your savings or are interested in switching between a Cash ISA and Stocks & Shares ISA. Your existing ISA contribution allowance is not affected when you transfer old ISAs to a new provider.
It’ll be easier to manage and review your ISA investments with them all in one place.
This means if you have collected a number of ISAs from several providers over the years you can bring them together in one place with no effect to your tax relief. Plus, it’ll be easier to manage your ISA investments and make sure they are performing in line with your objectives and risk attitude.
Other benefits of consolidating your ISAs
What is a Junior ISA?
You can start making tax-efficient investments for your child’s future by opening a Junior ISA (JISA) in their name. JISAs receive the same generous tax relief as adult ISAs, although they have a lower annual allowance of £4,080. Anyone can pay into a JISA but the child cannot access the money until they turn 18. And unlike adult ISAs, a child can only have one active JISA provider for each type of account (Cash or Stocks & Shares).
We are also able to transfer Child Trust Funds (CTFs) into JISAs. For more information, please contact us on 020 7189 2400 or visit this page.
Why choose Bestinvest for your ISA?
There are many reasons to choose Bestinvest as your ISA provider:
- We were voted Best Self-select ISA Provider, Best Online/Execution-only Stockbroker and Stockbroker of the Year in 2015 by readers of the FT and Investors Chronicle
- Choose from more than 2,500 funds plus ETFs, trusts and all UK-listed shares
- You get access to a wide range of free research, tools and guides to help you make informed investment decisions
- If you want to hand over investing to the experts, we have a number of options available. This includes our Ready-made Portfolios, which you can invest in from as little as £500
More benefits of the Bestinvest Stocks & Shares ISA