Make your savings work harder

Posted by siteadmin on Wednesday 24th of January 2018.

Individual Savings Accounts (ISAs) are tax-efficient savings plans that allow you to shelter up to £20,000 in the 2017/18 tax year free from income and capital gains tax. So, if you’ve always been a saver but you’ve never considered an ISA you could be losing out to the tax man.

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Make your savings work harder

You have a number of options when it comes to your ISA investment:

  • Invest up to £20,000 in a stocks and shares ISA
  • Invest up to £20,000 in a cash ISA
  • Invest up to £4,000 in a lifetime ISA
  • Split the £20,000 between the three

Whichever route you choose, it’s important to use your full ISA allowance every tax year. That way you can shelter more of your savings from tax and make your savings work harder.

Benefits of the ISAs

With a cash ISA, no matter the current interest rate, your savings will be free from income tax and will not count towards your Personal Savings Allowance. Therefore, you can save with a cash ISA and earn up to £1,000 income from any other savings (£500 if you are a higher-rate taxpayer), before having to pay income tax.

By taking a stocks and shares ISA, you will not have to pay any Capital Gains Tax (CGT), which is a good option if you are likely to exceed your £11,300 annual CGT allowance. Although there is always the risk when investing in stock markets the value may decrease as well as increase depending on the amount of risk you are prepared to take.


The tax efficiency of ISAs is based on current rules. The current tax situation may not be maintained. The benefit of the tax treatment depends on individual circumstances. Although there is no fixed term, you should consider stocks and shares ISAs to be a medium to long term investment of ideally five years or more. The value of your investments and any income from them may fall as well as rise and is not guaranteed. You may get back less than you invest. 

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