At a glance

  • In 2020/21, the total ISA allowance is £20,000. This can be spread over different ISA types, such as a Stocks & Shares ISA, Innovative Finance ISA or a Lifetime ISA
  • Don’t dismiss Cash ISAs – the decision to save in them could reap benefits in years to come
  • You can transfer your ISA savings from one provider to another at any time. You can also transfer to a different type of ISA – such as from a Cash ISA to a Stocks & Shares ISA
  • Your money is protected against bank failure up to £85,000 per account held within individual banking or financial groups

At a glance

  • In 2020/21, the total ISA allowance is £20,000. This can be spread over different ISA types, such as a Stocks & Shares ISA, Innovative Finance ISA or a Lifetime ISA
  • Don’t dismiss Cash ISAs – the decision to save in them could reap benefits in years to come
  • You can transfer your ISA savings from one provider to another at any time. You can also transfer to a different type of ISA – such as from a Cash ISA to a Stocks & Shares ISA
  • Your money is protected against bank failure up to £85,000 per account held within individual banking or financial groups

At a glance

  • In 2020/21, the total ISA allowance is £20,000. This can be spread over different ISA types, such as a Stocks & Shares ISA, Innovative Finance ISA or a Lifetime ISA
  • Don’t dismiss Cash ISAs – the decision to save in them could reap benefits in years to come
  • You can transfer your ISA savings from one provider to another at any time. You can also transfer to a different type of ISA – such as from a Cash ISA to a Stocks & Shares ISA
  • Your money is protected against bank failure up to £85,000 per account held within individual banking or financial groups

On 19 March 2020, the Bank of England cut interest rates to 0.1% – an all-time low. The move, which came in the wake of a drawn-out Brexit, was a response to the looming coronavirus pandemic – and occurred within three weeks of the 21st anniversary of the ISA.

With all this happening, you’d be forgiven if the new ISA season, which began on 6 April and comes with a £20,000 allowance, passed you by. But even with interest rates so low, there are plenty of reasons to keep faith in a Cash ISA, as well as other savings and investment vehicles.

ISAs as long-term savings plans

Given the uncertain economic outlook, it makes sense to prepare for the long haul, as it could take years to recover from the impending recession. This means spreading your money between different savings and investments, including placing some in Cash ISAs along with other ISAs.

Innovative Finance ISAs may prove a particularly good fit. The government is actively supporting entrepreneurial start-ups with a £1.25 billion package, a move which may generate more activity in this relatively new ISA market.

Don’t underestimate ISA tax benefits

Unlike standard cash accounts, which are hardly setting the world alight with high rates, the big advantage of an ISA is that your money is held within the all-important tax wrapper.

Yes, interest rates on Cash ISAs are very low at the moment. And yes, you have a personal savings allowance (PSA) that enables you to earn up to £1,000 in tax-efficient interest if you're a basic-rate taxpayer, or £500 if you're a higher-rate taxpayer. But things change, and with luck the PSA may not always cover what you earn through your tax-efficient ISA savings.

On this point, if you die with money in an ISA, your savings can be transferred to your surviving spouse with the tax-efficient status intact, and your partner will get an additional ISA allowance equal to the value of the cash passed on.

If you are 18 to 39 and want to save for a first home or for retirement you can open a Lifetime ISA (LISA). These Cash ISAs or Stocks & Shares ISAs feature a 25% government-paid bonus on the value of the account when you use it to put down a first-home deposit or reach age 60. You can save up to £4,000 a year in one, as well as a standard Cash ISA.

Picking the right Cash ISA

If you’re in the market for a Cash ISA, there are no shortage of options – from easy-access to fixed-rate ISAs. If you want to be free to pay in and take out money flexibly, easy-access remains the best option, as you can move your money without paying a penalty that could wipe out any interest earned.

Some easy-access ISAs allow you to take out cash and put it back in throughout the tax year, without it reducing your annual allowance.

The downside to easy access Cash ISAs is their uninspiring interest rates – the best on the market pay around 1% interest. If you want a better return, you should look to notice, fixed-rate accounts or other Cash ISAs that limit withdrawals.

Notice Cash ISAs are probably worth a punt if you’re uncomfortable about locking your cash into a fixed-rate account, as you can make one or more withdrawals by giving the required amount of forewarning.

If you like saving every month, regular saver Cash ISAs are also worthy of consideration, as they tend to pay a little more interest than easy-access ISAs. Of course, you’d need to commit to depositing a minimum payment each month, although some do allow you to take a month’s break, which may prove handy in these uncertain times.

How to protect your money

In difficult periods such as these, it’s natural to be concerned about the safety and security of your savings, which is another reason why it makes sense to persevere with a decent savings vehicle.

It’s unlikely that a major bank or building society will fail but if they do, the Financial Services Compensation Scheme will protect the first £85,000 held with an authorised account provider.

If you have more than that in savings, think about splitting your holdings between different banking groups to ensure full protection and be sure to consider the full range of savings products.

 

St. James's Place do not offer a LISA.

The value of a Stocks and Shares ISA will be directly linked to the performance of the funds selected and may fall as well as rise.  You may get back less than the amount invested.  

A Stocks and Shares ISA does not provide the security of capital associated with a Cash ISA.

The favourable tax treatment given to ISAs may not be maintained in the future, as they are subject to changes in legislation.

On 19 March 2020, the Bank of England cut interest rates to 0.1% – an all-time low. The move, which came in the wake of a drawn-out Brexit, was a response to the looming coronavirus pandemic – and occurred within three weeks of the 21st anniversary of the ISA.

With all this happening, you’d be forgiven if the new ISA season, which began on 6 April and comes with a £20,000 allowance, passed you by. But even with interest rates so low, there are plenty of reasons to keep faith in a Cash ISA, as well as other savings and investment vehicles.

ISAs as long-term savings plans

Given the uncertain economic outlook, it makes sense to prepare for the long haul, as it could take years to recover from the impending recession. This means spreading your money between different savings and investments, including placing some in Cash ISAs along with other ISAs.

Innovative Finance ISAs may prove a particularly good fit. The government is actively supporting entrepreneurial start-ups with a £1.25 billion package, a move which may generate more activity in this relatively new ISA market.

Don’t underestimate ISA tax benefits

Unlike standard cash accounts, which are hardly setting the world alight with high rates, the big advantage of an ISA is that your money is held within the all-important tax wrapper.

Yes, interest rates on Cash ISAs are very low at the moment. And yes, you have a personal savings allowance (PSA) that enables you to earn up to £1,000 in tax-efficient interest if you're a basic-rate taxpayer, or £500 if you're a higher-rate taxpayer. But things change, and with luck the PSA may not always cover what you earn through your tax-efficient ISA savings.

On this point, if you die with money in an ISA, your savings can be transferred to your surviving spouse with the tax-efficient status intact, and your partner will get an additional ISA allowance equal to the value of the cash passed on.

If you are 18 to 39 and want to save for a first home or for retirement you can open a Lifetime ISA (LISA). These Cash ISAs or Stocks & Shares ISAs feature a 25% government-paid bonus on the value of the account when you use it to put down a first-home deposit or reach age 60. You can save up to £4,000 a year in one, as well as a standard Cash ISA.

Picking the right Cash ISA

If you’re in the market for a Cash ISA, there are no shortage of options – from easy-access to fixed-rate ISAs. If you want to be free to pay in and take out money flexibly, easy-access remains the best option, as you can move your money without paying a penalty that could wipe out any interest earned.

Some easy-access ISAs allow you to take out cash and put it back in throughout the tax year, without it reducing your annual allowance.

The downside to easy access Cash ISAs is their uninspiring interest rates – the best on the market pay around 1% interest. If you want a better return, you should look to notice, fixed-rate accounts or other Cash ISAs that limit withdrawals.

Notice Cash ISAs are probably worth a punt if you’re uncomfortable about locking your cash into a fixed-rate account, as you can make one or more withdrawals by giving the required amount of forewarning.

If you like saving every month, regular saver Cash ISAs are also worthy of consideration, as they tend to pay a little more interest than easy-access ISAs. Of course, you’d need to commit to depositing a minimum payment each month, although some do allow you to take a month’s break, which may prove handy in these uncertain times.

How to protect your money

In difficult periods such as these, it’s natural to be concerned about the safety and security of your savings, which is another reason why it makes sense to persevere with a decent savings vehicle.

It’s unlikely that a major bank or building society will fail but if they do, the Financial Services Compensation Scheme will protect the first £85,000 held with an authorised account provider.

If you have more than that in savings, think about splitting your holdings between different banking groups to ensure full protection and be sure to consider the full range of savings products.

 

St. James's Place do not offer a LISA.

The value of a Stocks and Shares ISA will be directly linked to the performance of the funds selected and may fall as well as rise.  You may get back less than the amount invested.  

A Stocks and Shares ISA does not provide the security of capital associated with a Cash ISA.

The favourable tax treatment given to ISAs may not be maintained in the future, as they are subject to changes in legislation.

On 19 March 2020, the Bank of England cut interest rates to 0.1% – an all-time low. The move, which came in the wake of a drawn-out Brexit, was a response to the looming coronavirus pandemic – and occurred within three weeks of the 21st anniversary of the ISA.

With all this happening, you’d be forgiven if the new ISA season, which began on 6 April and comes with a £20,000 allowance, passed you by. But even with interest rates so low, there are plenty of reasons to keep faith in a Cash ISA, as well as other savings and investment vehicles.

ISAs as long-term savings plans

Given the uncertain economic outlook, it makes sense to prepare for the long haul, as it could take years to recover from the impending recession. This means spreading your money between different savings and investments, including placing some in Cash ISAs along with other ISAs.

Innovative Finance ISAs may prove a particularly good fit. The government is actively supporting entrepreneurial start-ups with a £1.25 billion package, a move which may generate more activity in this relatively new ISA market.

Don’t underestimate ISA tax benefits

Unlike standard cash accounts, which are hardly setting the world alight with high rates, the big advantage of an ISA is that your money is held within the all-important tax wrapper.

Yes, interest rates on Cash ISAs are very low at the moment. And yes, you have a personal savings allowance (PSA) that enables you to earn up to £1,000 in tax-efficient interest if you're a basic-rate taxpayer, or £500 if you're a higher-rate taxpayer. But things change, and with luck the PSA may not always cover what you earn through your tax-efficient ISA savings.

On this point, if you die with money in an ISA, your savings can be transferred to your surviving spouse with the tax-efficient status intact, and your partner will get an additional ISA allowance equal to the value of the cash passed on.

If you are 18 to 39 and want to save for a first home or for retirement you can open a Lifetime ISA (LISA). These Cash ISAs or Stocks & Shares ISAs feature a 25% government-paid bonus on the value of the account when you use it to put down a first-home deposit or reach age 60. You can save up to £4,000 a year in one, as well as a standard Cash ISA.

Picking the right Cash ISA

If you’re in the market for a Cash ISA, there are no shortage of options – from easy-access to fixed-rate ISAs. If you want to be free to pay in and take out money flexibly, easy-access remains the best option, as you can move your money without paying a penalty that could wipe out any interest earned.

Some easy-access ISAs allow you to take out cash and put it back in throughout the tax year, without it reducing your annual allowance.

The downside to easy access Cash ISAs is their uninspiring interest rates – the best on the market pay around 1% interest. If you want a better return, you should look to notice, fixed-rate accounts or other Cash ISAs that limit withdrawals.

Notice Cash ISAs are probably worth a punt if you’re uncomfortable about locking your cash into a fixed-rate account, as you can make one or more withdrawals by giving the required amount of forewarning.

If you like saving every month, regular saver Cash ISAs are also worthy of consideration, as they tend to pay a little more interest than easy-access ISAs. Of course, you’d need to commit to depositing a minimum payment each month, although some do allow you to take a month’s break, which may prove handy in these uncertain times.

How to protect your money

In difficult periods such as these, it’s natural to be concerned about the safety and security of your savings, which is another reason why it makes sense to persevere with a decent savings vehicle.

It’s unlikely that a major bank or building society will fail but if they do, the Financial Services Compensation Scheme will protect the first £85,000 held with an authorised account provider.

If you have more than that in savings, think about splitting your holdings between different banking groups to ensure full protection and be sure to consider the full range of savings products.

 

St. James's Place do not offer a LISA.

The value of a Stocks and Shares ISA will be directly linked to the performance of the funds selected and may fall as well as rise.  You may get back less than the amount invested.  

A Stocks and Shares ISA does not provide the security of capital associated with a Cash ISA.

The favourable tax treatment given to ISAs may not be maintained in the future, as they are subject to changes in legislation.

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