Make the most of your savings with an ISA

The new tax year is almost here, meaning you've only got until 5 April to make the most of your 2013/2014 ISA allowance before it's lost forever.

The new tax year is almost here, meaning you've only got until 5 April to make the most of your 2013/2014 ISA allowance before it's lost forever.

An Individual Savings Account (ISA) lets UK taxpayers enjoy tax-free returns on the money they put in their ISA. Each tax year, every adult in the UK qualifies for an annual ISA allowance - but you can't roll it over so it must be used within that tax year.  

If you've built up a savings pot that isn't in an ISA, it makes sense to switch. If you're a basic rate taxpayer, you'll avoid paying income tax of up to 20% on any interest your savings earn. If you're in the higher-rate tax band, you'll save yourself 40% on any interest you earn.

How does an ISA work?

You can invest in up to two separate ISAs in any one tax year: a cash ISA and a stocks and shares ISA, and can choose the same or different companies. 

A cash ISA pays you interest on your savings, just like a bank deposit account. A stocks and shares ISA generally aims to give you a higher rate of return than you would earn from a typical deposit account; however, there's a risk that your money may go down as well as up.

For the 2013/2014 tax year, you can still save the full allowance - £11,520 - in a stocks and shares ISA or up to £5,760 in a cash ISA.

If you invest in a cash ISA, you can put the remainder of your ISA allowance into a stocks and shares ISA. For example, if you invest £2,000 in a cash ISA, you'll have £9,520 left to invest in a stocks and shares ISA in this tax year.

Whether you want to use your full stocks and shares ISA allowance or just your cash allowance, you've only got until 5 April to do so for the current 2013/2014 tax year.

From next tax year, which starts on 5 April, the ISA allowance will increase to a total of £11,880, of which up to £5,940 can be invested in a cash ISA.

Our Guaranteed ISA

If you want to give your money the opportunity to grow while protecting any growth at five-year set points, try our Guaranteed ISA, which comes with the safety net of our unique Double Guarantee.

Did you know…you can save directly into our Guaranteed ISA from your Police salary from only £40 per month?