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How to maximise your tax-free savings

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Making the most of the tax-free allowance is an effective way to make sure you are getting the maximum return on your cash savings.

The Personal Savings Allowance was launched in 2016, giving a tax-free savings alternative for ISAs.  Depending on their tax banding, savers can earn up to £1,000 of interest on savings before any personal tax is paid.

But what If you reach your maximum personal savings allowance? How do you make the most of your tax-free ISA allowance too?  

The ISA Wallet and flexibility are additional ISA features offered by some providers, that can help make your ISA savings work better for you.

The ISA Wallet allows savers to spread their £20,000 annual ISA allowance with the same provider across multiple cash ISAs, rather than just open one specific account. Savers can invest their money across a range of Easy Access, Notice and Fixed accounts, enabling them to get the most from their ISA savings in a single tax year.

Flexibility means you can withdraw and replace the funds in your ISA without using your annual £20,000 ISA allowance. For example, in an easy access ISA that’s not flexible you can deposit £10,000, withdraw £5,000 and later put £5,000 back in - and you’ve used £15,000 of your annual ISA allowance. A Flexible ISA means that you can withdraw and replace that £5,000 and it won’t count towards your annual allowance of £20,000.

These two features work together to enable you to make the most of your annual ISA allowance, allowing the combination of different rates and benefits. Any funds withdrawn will be added back into your ISA allowance for you to reinvest with the same provider that same tax year.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551