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Why are ISAs so popular?

Find out how Individual Savings Accounts (ISAs) work and understand the differences between cash, investment, innovative finance & lifetime ISAs.

An ISA is an Individual Savings Account

Reasons to choose an ISA

Capital Gains Tax

Income tax

Tax on dividends

Growth Interest Dividends

Income growth

Capital growth

 

All income or gains you receive in your ISA will be protected from income tax, tax on dividends and capital gains tax (CGT).

However, tax rules can change however and any benefits from them depend on your circumstances.

Types of ISAs

Anything that covers the running of your account, but doesn't directly relate to transactions, is covered within a single monthly payment.

Cash ISAs

A cash-only savings account based on a fixed or variable deposit rate.

Innovative finance ISAs

A higher risk arrangement that allows you to lend your savings out to borrowers through peer-to-peer lending platforms, where interest earned is tax-free.

Investment ISAs

Also known as a stocks and shares ISA, an account that allows you to invest in a wide range of assets, including cash, funds, shares, gilts, bonds, exchange traded funds (ETFs), exchange traded commodities (ETCs) and investment trusts.

Lifetime ISAs

The lifetime ISA helps savers get on the property ladder for the first time or contribute towards their retirement savings. The government pays a 25% bonus on cash paid in, up to a maximum of £4,000, equivalent to £1 for every £4 saved. But they are not flexible and there are penalties if you withdraw money for other uses.

ISA facts

In 2016-17. 77%of all ISAs subscribed to were cash ISAs and 23% were investment ISAs.

£585 bn worth of assets were held in ISAs in 2016-17, split roughly 46/54 between cash ISAs and investment ISAs.1

11.1 million people subscribed to an ISA in 2016-17, with subscriptions worth a combined £62 billion.1

Woman are more likely than men to subscribe to cash ISA.

Men are more likely than woman to subscribe to an investment ISA.

£20,000

There is a set allowance you can add to an ISA each tax year. In the 2018-19 tax year, your allowance is £20,000, of which a maximum of £4,000 can be paid into a lifetime ISA.

More to play for

More to invest

ISA allowance for the 2018-19 tax year will remain at £20,000, of which a maximum of £4,000 can be paid into a lifetime ISA.

More choice

An even wider choice of investment options to choose from with increased flexibility.

  • Cash with a cash ISA
  • Cash and investments with an investment ISA
  • Peer-to-peer lending with an innovative finance ISA
  • Cash and investments with a lifetime ISA

More flexibility

You can split your ISA allowance between a cash, investment, innovative finance, or lifetime ISA,2 provided you stay within the £20,000 limit.

You can take advantage of the flexible ISA rules with Barclays – you can withdraw money from our Investment ISA and replenish it within the same tax year, without this counting towards your annual ISA limit. Not all ISA providers offer this flexibility. Maximum of £4,000 can be paid into a lifetime ISA per year.

More freedom

You can transfer money freely between a cash ISA, an investment ISA and an innovative finance ISA, as your needs and risk appetite changes over time.

However, while you can currently transfer money out of a lifetime ISA, if you do this after 6 April 2018, you will forfeit the government bonus and face a 5% charge on the amount transferred out. You can also transfer cash or investments into a lifetime ISA up to the annual limit, still receive the government bonus but it does not represent use of your annual allowance.

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The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances. Before transferring your investments, find out about any charges, exit penalties, benefits you may lose or investments that you can’t transfer to us.

Investment ISA

A tax-efficient way to invest

Take advantage of tax-efficient investing and protect your returns from income tax, tax on dividends and Capital Gains Tax (CGT).

Transferring ISAs

There are a number of reasons why transferring your Individual Savings Account (ISA) could stand you and your investments in good stead.