All about ISA

There are many financial terms and jargon, most of which people do not understand. One of those terms is a cash ISA. This article will discuss the definition for the term İSA and you can decide if this financial term has any relevance to you.

İSA

Definition
A cash ISA is an Individual Savings Account which allows you to save up to £7,200 a year without having to pay tax on the interest that you earn. Saving you a little extra Introduced by the government in 1999, they were considered as a way to encourage people to save and invest, and the rules were simplified in 2008, ditching Maxi and Mini ISAs and replacing them with cash or Stocks and Shares ISAs. Therefore, anyone investing their full annual allowance each year since ISAs were introduced would have sheltered £79,400 from the taxman, excluding any capital gains made on their savings.They currently allow you to invest up to £7,200 in any one tax year, with each tax year running from 6 April to 5 April the following year. Therefore, you have a limit to what you can save in your İSA. Different types of ISA You can have one of each type of ISA and the annual total of £7,200 can therefore be split between one cash ISA and one Stocks and Shares ISA, in whatever way you want, without exceeding the cash ISA limit of £3,600 or the Stocks and Shares ISA limit of £7,200. While some ISA providers will stipulate a minimum investment amount, you can pay into your ISA whenever you want. You can pay the maximum allowance in one go, make regular payments or pay in at intervals. You can stop making regular payments at any time.

Limits with ISAs

ISA saving limit
From 6th October 2009, the ISA subscription limit will increase from the current total of £7,200 to £10,200 for anyone born on or before 5th April 1960. Therefore, this provides more sheltered money from the taxman. İnterest rates on your İSA will ultimately vary depending on the base rate at that time. For more information on how to establish an İSA, your bank’s ISA manager will be able to tell you about the ISAs it offers, and which type of ISA might be best for you. However, they might not offer the best rate, so it pays to shop around.