Get The Best Cash Isa Rates

ISA stands for "Individual savings account". Effectively it is a range of investments, you can hold which are not subject to income tax or capital gains tax. Any money held outside an isa is subject to both these taxes.

How much can you invest in an ISA? -

At the time of writing £7,200 can be invested in an isa in a tax year. Unless you use your allowance in one year it cannot be rolled over into the next year.

The £7,200 allowance encompasses both the cash and investments isa. Up to £7,200 can be invested in an investment isa, but a maximum of £3,600 can be put into a cash isa.

Example 1.

Suppose in one tax year you wish to invest £2,000 in a shares isa. You can still ony invest £3,600 in a cash isa, giving you a total isa investment of £5,600.

Example 2.

You put £3,600 into a cash isa, but you decide later in the year that you need to withdraw £1,000 for an emergency. By initially investing your maximum amount you cannot then decide within that year to re-invest the £1,000.

Any time you withdraw money from a cash isa the money you have withdrawn immediately loses its tax-free status. The rest of the money you have in the cash isa will usually keep its tax-free status, but accounts differ.

If you decide to make some isa investments the same caveats that are applicable to normal bank accounts and investments still apply. Be sure to read the small-print of any investment. Make sure that any interest rates given will last.

To compare cash isa rates try googling "cash isa comparison" to get the best cash isa rates.

Always make sure you understand the rules of an investment before you apply.



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