Cash ISA Allowances and Rules
Cash Individual Savings accounts or Cash ISAs as they are commonly called are tax free savings accounts which allow you to save without declaring any income from them. The current 2011/12 Cash ISA limit is £5,340 and will rise to £5,640 in the 2012/13 tax year.
Types of ISA |
ISA Allowances |
ISA Rules |
Cash ISAs |
2011/12 - £5,340 per individual
2012/13 - £5,640 per individual |
Must be 16 and a UK resident or Crown employee.
Transfers in from other Cash ISAs from previous years permitted.
You can save in 2 separate ISAs in any one tax year e.g.1 Cash ISA and 1 stocks and shares ISA. You cannot save in more than one cash ISA |
Stocks and Shares ISAs |
2011/12 - £10,680 per individual
2012/13 - £11,280 per individual |
Must be 18 and a UK resident or Crown employee.
Transfers in from Cash or Stocks and Shares ISAs from previous years permitted. |
Junior ISAs |
£3,600 per annum per child |
Must be under 18 and live in the UK. Must not already hold a Childrens Trust Fund (CTF) account.
The child can have both a junior cash ISA and a Junior stocks and Shares ISA as long as total amount invested in the tax year is no more than £3,600. If child is under 16 someone with parental responsibility must open the Junior ISA (registered contact). |
Benefits of a Cash ISA
There is a wide range of savings account deals to choose from so we have highlighted some of the benefits:
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Income Tax – If you are a taxpayer no further tax is payable on income received from ISA savings interest or investment income.
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Tax Return – No need to declare your ISA on a personal tax return
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Access – Money can be withdrawn from an ISA at any time
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Transfer – You can transfer your ISA to another ISA provider to benefit from higher interest rates (cash ISA) or potential better investment performance (stocks and shares ISA) or lower charges.
With interest rates at the time of writing at an all-time low the impact in real terms of inflation on your money is not to be underestimated in eroding the buying power of your hard earned cash. For latest 2012 ISAs use our cash isas rates tables to ensure you get a good savings rate.
How much tax will you save through a Cash ISA?
- Basic Rate taxpayers - outside an ISA you would usually pay 20 per cent tax (2011-12) on your savings interest. In a Cash ISA this savings interest is tax free.
- Higher Rate taxpayers - outside an ISA you would usually pay tax at 40 per cent on your savings interest. In a Cash ISA this savings interest is tax free.
- Tax at the additional higher rate - outside an ISA you would usually pay tax at 50 per cent on your savings interest.
- If you pay the 'saving rate' of tax for savings, outside an ISA you would pay tax at 10 per cent on your savings interest.
Can I transfer a Cash ISA?
- If you have money saved from a previous tax year you can transfer some or all of the money from a cash ISA to another Cash ISA provider or to a stocks and shares ISA without affecting your current annual ISA investment allowance. See cash ISA transfer for more information.
- Once you have transferred a Cash ISA into a Stocks and Shares ISA it cannot be transferred back into a Cash ISA.
To compare latest Cash ISA deals use our comparison tables for the latest cash ISA rates