Cash ISA Guide 2012

Make the most of your 2012 Cash ISA allowance

What is an ISA?   |  How much is the ISA allowance?  |  How can you use your ISA?  | ISA transfers  |  Start saving early 

Ideas for your ISA

ISAs (Individual Savings Accounts) are one of the only means of saving without having to give a cut of the profits to the taxman.

What is an ISA? Using an ISA means you pay no income or capital gains tax on any interest or returns you make. An ISA is not a type of investment; it is an amount of money that you can protect from tax each year. Where you save or invest this money is up to you. How much is the ISA allowance? For the 2012/13 tax year the total ISA allowance is £11,280. The cash ISA allowance is £5,640. Alternatively, you can put it all in an investment ISA. Since April 2011, the government has set the ISA allowance to rise in line with inflation each year. Either the full amount can be saved in a stocks and shares (investment) ISA or half in a cash ISA and half in a stocks and shares ISA. Alternatively, you can just save using the cash ISA allowance. The ISA allowance is per person (age limit is over 16 for cash ISAs and over 18 for stocks and shares ISAs).

How can you use your cash ISA allowance?

To make the most of your cash ISA allowance, you can choose the right kind of savings product to suit your needs. If you want the highest savings rates, then there is a range of fixed rate cash ISA of 1-5 years. Or if you don't want to lock your money away, you can opt for an instant access cash ISA. Alternatively, you can use structured deposit ISAs which offer potentially higher returns than fixed rate savings, but these returns are dependent on the performance of an index, such as the FTSE 100. Use the tables below to compare our latest selections of market-leading cash ISAs:

ISA transfers

Transferring previous years’ cash ISA savings into an ISA account with a higher rate could significantly boost any tax-efficient interest you earn. Transferring is easy, but you must make sure that you transfer properly.

If you encash your previous years’ ISA allowances they will lose their tax exempt status and you will undo your previous good work. All you need to do is request a transfer form for the new account, fill it in, and your new ISA provider should do the rest for you.

You may wish to consolidate any existing ISAs into one new ISA account to maximise any increased returns, because some cash ISA providers offer tiered interest rates, so the more you save the higher interest rate you get. Another thing to bear in mind is that you can transfer your existing cash ISAs into stocks & shares ISAs, but not the other way round, so once your cash ISA has become a stocks and shares ISA, you can't change it back.

Start saving early

The earlier you save your ISA allowance in a tax year, the more time there is for it to generate interest, protected from tax.

Ideas for your ISA

There is a wide range of savings options to choose from for your cash ISA allowance. use the tables we've provided to discover some of the latest deals on fixed rates, instant access and structured deposit alternatives.