What Is A Cash ISA

Isas – or individual savings account – are tax-free savings or investment accounts that are offered by banks, insurers, and other sources. There are two main types – cash Isas and stocks/shares Isas. 

There are two main types of cash Isa accounts. Instant or easy access Isas allow you to withdraw money whenever you like. Whereas, fixed-rate accounts pay a higher rate of interest but you have to leave your money for a year. Just like normal savings accounts there’s a variety of cash ISAs available, such as instant access, fixed rate, and accounts with guarantees rates.

Here are some other key points to cash isas:

• You do not have to pay income tax on the interest.
• There are no capital gains taxes on profits.
• Cash isas are good for retirement because of the tax break.
• Most cash Isas give you easy access to your money when you need it. 
• Everyone aged 16 or over can save a limited amount in one each tax year
• You get a new ISA allowance each year.
• You can transfer Isas from past years to present year for rates.

You are only allowed to have one ‘active’ Isa per tax year; however, you can hold multiple Isas that are considered inactive from previous tax years. That means if you have already paid into an Isa this tax year, you can still transfer previous years’ savings into different accounts.