Individual Savings Accounts, otherwise known as ISAs, were first introduced into the UK savings market in 1999. Today, over £250 billion is held in cash ISAs, representing about a quarter of the nation’s total cash savings.*
The main benefit offered by saving in a cash ISA is that all of the interest is tax-free both now and into the future. It’s this easy-to-understand feature that’s central to the enduring popularity of the ISA and, as we begin the countdown to the new financial year, we highlight three things to look out for.
During the current financial year (which runs from 6 April 2016 to 5 April 2017), any UK citizen over the age of 16 can deposit up to £15,240 into an ISA. From 6 April 2017, this annual allowance increases to £20,000, giving savers substantial scope to add to their tax-free, savings pot.
As your cash ISA savings grow, it’s important to make sure that your savings pot continues to earn a competitive interest rate. This year the industry has set itself an ambitious seven-day transfer goal, meaning that moving your ISA has never been easier! Interestingly, even ahead of implementation of this new industry goal, 95% of all ISA balances transferred into our accounts electronically reach us within the seven-day timeframe. This ISA season therefore provides a good opportunity to transfer existing savings to a new provider offering better value.
We launched our first ISA products at Paragon Bank in summer 2016. One of only a handful of challenger banks to enter the ISA market to date, we’ve been broadening our cash ISA range and stepping up our interest rates ready to compete this spring.
To find out more about Paragon Bank’s full range of ISA products or to open an account, view our product range here.
*Source: ISA Statistics, August 2016, HM Revenue and Customs and FCA Cash Savings Market Study Report, January 2015