Saving with an ISA
Wed 01 Mar 2017
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 ISA Limit
The ISA limit for the tax year ending on 5 April 2017 £15,240. And as it's not possible to roll over any unused allowance to the next tax year, you need to use it or lose it. The good news is that the ISA limit for the new tax year starting 6 April 2017 is increasing to £20,000.
With a Cash ISA, you can make a lump sum deposit into your account, or make regular payments up to your annual limit, and you can access your money at any time. All interest is accrued and paid free of tax. Cash ISAs are available to UK residents over 16 years old.
Stocks & Shares ISAs
With a Stocks & Shares ISA, you're investing rather than saving, and 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 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 don't have to make a choice between a Cash ISA and a Stocks & Shares ISA - you can have both types of accounts and split your money and 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.
For more information on the Police Mutual Options ISA, click here.
Type of article: Articles
Category: Saving my money
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