The end of the financial year comes around every April, and it’s the sort of time when people start thinking about what they want to do with their spare cash. If you are financially smart then the chances are you’ll want to take advantage of an ISA. This is a sort of saving accounts that allows you many tax benefits.
If you have a standard savings account, then you’re going to be paying tax on any interest that you get on that money. However, if you decide to store your money in an ISA, then you are not going to be liable for tax on any interest earned.
An Individual Savings Account is someplace where you can put money in order to keep it away from the taxman. There is a limit on how much money you can put in this account every year, and this is currently set at nearly £11,000.
There are currently two different types of ISA, one that is dedicated to stocks and shares and one that is dedicated to cash. Even if you have both of these types, you are going to be limited to £11,000, and you can spread this however you like between the two types of ISA.
The cash ISA is very similar to a normal savings account and it will just be a place for you to store your money, only one where you don’t have to pay tax. The stocks and shares ISA comes with all the risks that are normally associated with the stock market, so be aware that if the price of the shares you have invested in falls, you are going to lose your money, just like with ordinary shares. The general consensus is you shouldn’t open a stocks and shares ISA unless you are planning a long-term investment.