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Saving with an ISA

Fri 05 Apr 2019

ISAs (Individual Savings Accounts) can provide a tax-efficient home for your savings and investments.

The two most common types are "Cash ISAs" and "Stocks & Shares ISAs", and each year you get a new ISA allowance that caps the amount you can save without paying tax on the interest. The good news is that the ISA limit for the new tax year starting 6 April 2019 is £20,000.

Cash ISAs

With a Cash ISA, you can normally make a lump sum deposit into your account, or make regular payments up to your annual limit, and with instant access Cash ISAs you can access your money at any time. With fixed-term Cash ISAs, you can usually only withdraw your money at the end of fixed rate term. Some accounts will allow early withdrawals, but there may be a penalty. All interest is paid free of tax. Cash ISAs are available to UK residents over 16 years old.

Stocks & Shares ISAs

With a Stocks & Shares ISA your money is put into funds which can include shares and bonds. Stocks & Shares ISAs are available to UK residents over 18 years old, and any returns are exempt from UK Income Tax and Capital Gains Tax.

Transferring an existing Cash ISA or Stocks & Shares ISA

If you already have an ISA or ISAs from previous years, you can transfer your savings to another provider without affecting this year's ISA allowance. And you can switch money between a Cash ISA and a Stocks & Shares ISA, and vice versa. The process should be simple, with your ISA provider managing the transfer for you.

Considering your options

If you're thinking of opening a new ISA, you can choose either a Cash ISA or a Stocks & Shares ISA – or you can have both types of account and split your ISA allowance any way you like between the two.

While Cash ISAs are basically tax-free savings accounts, Stocks & Shares ISAs offer a straightforward way for people who aren't professional investors to enjoy the benefits of investing, and you certainly don't need to be a financial wizard to open one.

Some Stocks & Shares ISAs offer instant access to your money, plus the possibility of a small return. Some offer a fixed return if you're willing to lock your money in for a set period. And some offer a variable return, which may be higher or lower than a "fixed return" depending on the performance of the funds your money is invested in. For anyone willing to sacrifice guarantees, some ISAs offer potentially higher returns, but the money invested will be exposed to market variations, so you could get back less than you initially invested.

The Police Mutual Options ISA offers a flexible range of features, which means you can choose to spread your money, creating a solution that is tailored to match your individual requirements.

The value of tax benefits depends on your individual circumstance and tax rates or legislation which could change in the future.

The value of your investments can go up or down so you may get back less than your initial investment.

For more information on the Police Mutual Options ISA, click here.

Police Mutual Assurance Society Limited is an incorporated friendly society authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered office: Alexandra House, Queen Street, Lichfield, Staffordshire WS13 6QS.

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Type of article: Articles
Category: Saving my money

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