What are Individual Savings Accounts (ISAs)? Part One
Individual Savings Accounts, or ISAs, are tax-effective alternatives to invest and save money. There are four primary ISA kinds, each with a unique set of advantages and regulations. These four categories include Junior ISAs, Cash ISAs, Stocks and Shares ISAs, and Lifetime ISAs.
These little beauties offer UK citizens an opportunity to increase their money tax-free and keep a larger portion of the profits from their investments than they would in a conventional brokerage account.
ISA accounts, that were first created in 1999, have quickly become popular among savers and investors throughout the UK.
You may deposit up to £20,000 yearly in cash ISAs. For the next tax year (2022-2023), this has been extended. When evaluating a Cash ISA to a basic savings account, consider the question "What is an ISA?" The difference is that interest is not subject to tax.
Any interest you earn on traditional savings accounts with a bank or building society over £1000 is taxed as income. You must reside in the UK and be older than 16 in order to qualify for a Cash ISA.
Having a cash ISA actually only has benefits if your interest is greater than £1000 per year. That said, if you plan to deposit big sums and keep them there for more than a year, it is still a very smart decision.