Are you making the most of your ISA allowance?

In the Financial Lives 2020 survey from the FCA, it has been found that older adults were more likely to hold a savings account of any type, than younger adults. For example, 83% of those aged 55+ did, compared with 63% of 18–24-year-olds. So, how could an ISA help you?

ISA
An ISA is an individual savings account that allows you to save tax-free money in a cash or investment account, so you could end up getting more for your money. An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth, income, or both. There are a few different types of ISAs including, Cash ISA's and Stocks and Shares ISA's. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.

Cash ISA
A Cash ISA is a tax-free savings account where you can deposit up to a yearly limit and pay no tax on the interest that you earn. There are three principal types of cash ISA: Instant Access, Regular Savings and Fixed rate. Anyone over the age of 16 can open one cash ISA in each tax year with as little as £1. Although Cash ISAs can be a good way to start your investment journey, they can have their drawbacks. If you find yourself with low interest rates and high inflation, this can lead to poor rates and therefore eroding value.

Stocks and Shares ISA
A stocks and shares ISA, also known as an investment ISA, is a tax-efficient investment account that can help make your money work harder. Unlike a cash ISA, a stocks and shares ISA gives your money more potential to grow by investing it in a range of places like shares, funds, investment trusts and bonds, instead of keeping it in cash. It’s a smart way to protect your money from being taxed, as you won’t pay a penny in capital gains, tax, or income tax on any profits you make in the future. So, whether you’re saving for a holiday of a lifetime, a property deposit, or simply for a rainy day, switching to a stocks & shares ISA could give your savings the boost they need to meet your financial goals.

Don’t forget to use your 2021-2022 allowance before the end of 5 April 2022.

	2020 - 2021	2021 - 2022
Total ISA limit	£20,000	£20,000
Lifetime ISA	£4,000	£4,000
Junior ISA and Child Trust Fund	£9,000	£9,000

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.