Saving and investing wisely can make a big difference to your financial future, and an Individual Savings Account (ISA) is one of the best ways to do it – tax-free! Whether you’re looking for a secure place to grow your savings, invest in stocks and shares, or even plan for your first home, ISAs offer flexibility and valuable benefits.

In this guide, we’ll break down the different types of ISAs, the current rules, and how you can make the most of your tax-free allowance.

What’s an ISA?

An ISA is an Individual Savings Account. Unlike regular savings and investment accounts, you don’t pay tax on returns you make in an ISA. You can add up to £20,000 into ISAs for individuals and £9,000 into Junior ISAs for children each tax year. 

Types of ISAs

There are a few different types of accounts for individuals, with Cash ISAs, Stocks and Shares ISAs and Lifetime ISAs being the most popular. The maximum amount you can add to a Lifetime ISA in a tax year is £4,000.

The image below is one example of how the £20,000 allowance could be split between three types of ISAs.

You can open a Cash ISA through us. The Cash ISA works in the same way as a traditional savings account, with interest paid on your savings.

With the Stocks and Shares ISA (not offered by CCU), you invest your money – its value goes up and down, depending on how your investments perform. Lifetime ISAs (not currently offered by CCU) are designed to help individuals save for a first home or retirement, offering a 25% government bonus on savings, up to £1,000 per year.

With all three ISAs you don’t pay any tax on your returns – no matter how big they are.

Learn more about ISAs and the rules around them on the government website.

Paying into multiple accounts of the same type of ISA in a single tax year is allowed

In the past, you could only pay into one ISA of each type per tax year.

But under the new rules, applied in 2024,  you can now pay into more than one of the same type of ISA – all within the same tax year.

So, if you’ve already added money to a Cash ISA with one provider but spot a better rate elsewhere, you’re free to pay into that one too – as long as your total ISA contributions don’t exceed the £20,000 annual limit. (Note: This doesn’t apply to Lifetime ISAs).

Maximise your tax-free savings – little by little

You don’t need to add large lump sums to make the most of your tax-free allowance. Small, regular contributions can make a big difference over time.

  • With our Cash ISA, you can start with as little as £100.
  • Enjoy instant access – withdraw your money whenever you need it.
 

Make your money work smarter — tax-free! Open your Capital Credit Union Cash ISA today.