Here you can find answers to the most frequently asked questions regarding ISAs.

What is an ISA?
ISA is short for Individual Savings Account and while these accounts are similar to regular savings accounts they differ in one major way – you don’t pay tax on the interest earned up to a certain point. This is why a lot of people choose ISAs in preference to regular savings accounts.

How do ISAs work?
Each year you and every other person in the UK gets a tax free allowance of £7200 for savings. This means you can save cash or stocks & shares or both in an ISA up to the value of £7200 and not pay any tax on the interest earned. There are two types of ISA available – a cash ISA and a stocks & shares ISA. At present you can save up to £3600 in a cash ISA and £7200 in stocks & shares – but if you save cash to the value of £3600 you only have £3600 of your allowance left for stocks & shares.

Can I have more than one ISA?
You are allowed to open one cash ISA and one stocks & shares ISA per year and once you have invested the maximum amounts then that’s it until the following year. The total allowance is £7200 with a maximum of £3600 in cash. You don’t have to use this allowance for cash though and it can easily be added to the stocks & shares allowance e.g. you can invest £1200 in cash and £6000 in stocks & shares if you prefer.

Where can I open an ISA?
Cash ISAs are available from virtually ever bank and building society on the high street. Their interest rates tend to be very similar and so you might need to do a bit of research to find the account that offers the most. Stocks & shares ISAs are also available from a few of the banks and building societies and if the interest rates are competitive then you can often get both types from the same provider.

Can I get to my money if I need it?
The great thing about cash ISAs is that they are instant access accounts. This means you can withdraw your money whenever you want to. You have to remember though that if you deposit £2000 and then withdraw £1000 you still only have £1600 of your allowance to play with – the amount doesn’t go back up to £2600 because you made the withdrawal. Stocks & shares ISAs are a bit different because your money is in the form of investments so it is worth talking to your chosen provider for this information.

Can I move my money to another ISA manager?
You can but it is important that you don’t withdraw your money and then open a new account. Doing this would mean that you forfeit the tax free provision because your original ISA would be the only one you’re allowed for the year. If you wanted to move to another bank or building society you’d have to arrange for your current bank to transfer the account to your new bank, so the tax free provision remains in place.

Where can I find more information?
The best place to find further information on ISAs is the HM Revenue & Customs website. Alternatively each of the high street banks and building societies will have leaflets in their branches which outline their interest rates and any additional benefits on offer.