Everything you need to know about Individual Savings Account (ISA)

Individual savings accounts also known as ISAs works pretty much in the same way as any other savings accounts. Unlike a standard savings account with ISA, you don’t pay tax on interest earned. They’re arguably more efficient and rewarding investment compared to other saving accounts.

Interest rates can be fixed or variable therefore, can change over a period time. When compared to other types of savings accounts, ISAs typically have higher interest rates (though they are not as high as regular savings).

Types of ISAs

Did you know that an ISA is not limited to having stocks and shares? There are two different types of ISAs which are Cash, Stock and Shares. Furthermore, there is a limit on the amount of money you can deposit in your ISA each year, the current limit is set at £20,000 for the 2019-2020 tax year. You can put money into one of each kind of ISA each tax year. To help you decide whether this form of investment is for you, we’ve listed the advantages and disadvantages:


• Any interest you earn is tax-free.
• If you choose an easy access ISA you can still have instant access to your cash.
• You can make regular monthly payments or deposit a lump sum depending on your circumstances giving you greater flexibility on how much you can save each month.
• You have three different types of ISAs to choose from: cash, stocks and shares, or a combination of both.


• There is set limit, you can only deposit a maximum of 20,0000 in the current tax year.
• High interest is only available if you choose an account with fixed term.

Why Choose an ISA?

Unlike other accounts, any interest you earn is tax-free. It also gives you flexibility as it allows you to make regular monthly payments or deposit a lump sum, depending on your circumstances giving you control on how much you can save each month. To get the best interest rates you will have to choose an ISA with fixed term interest. This means that you have tie up your money for a specific period and you won’t be able to make withdrawals for that period. Therefore, ISAs works better for people who have long-term savings goals e.g. savings money for retirement.

Should you Invest in a Stocks & Shares ISA?

As with any form of investment, the value of your money can decrease as well as increase when you invest in a Stocks and Shares ISA.

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