ISAs

Saving in an Individual Savings Account (ISA) means you do not have to pay any tax on any investment return or interest/income received from your ISA.

In the tax year 2016/17 you can subscribe up to £15,240 to an ISA.

The subscription limit has undergone a number of changes since ISAs were introduced in 1999 and is due to rise to £20,000 on 6th April 2017.

Prior to April 2016 there were two types of ISA

The benefits of ISAs

ISA managers

All ISA managers must be authorised by the Financial Conduct Authority (FCA) (www.fca.org.uk) before HM Revenue & Customs (HMRC) approve them as an ISA manager. Approval does not mean that HMRC or FCA can guarantee:

Transferring an ISA

You can transfer an ISA to another ISA manager but this must be done in cash, which means that you could lose money if, for example, markets rise while the transfer is being processed or, if you have a Cash ISA, you have not reached the end of a fixed term on which the interest you receive depends. You should also check with your manager if any charges apply.

Inheriting ISAs

From April 2015, it has been possible for the spouse or civil partner of an ISA holder who died after 3rd December 2014 to “inherit” the ISA of their deceased partner by receiving an additional subscription allowance equal to the value of the deceased’s ISA at the date of death.

Flexible ISAs

Before April 2016, if you withdrew money from an ISA, the money could not be reinvested in an ISA without it counting towards the annual subscription limit.

Help to Buy ISAs

Introduced in 2015, Help to Buy ISAs are available from banks and building societies and are a form of Cash ISA to help savers towards buying a first home.

Lifetime ISAs

Due to be introduced in April 2017, a Lifetime ISA can be a Cash, Stocks and Shares or Innovative Finance ISA available to those aged between 16 and 39.

Moving abroad

You are only able to put money into an ISA if you are resident in the UK for tax purposes.