The cash ISA is not dead
You've probably heard about all the innovations to savings, the biggest of which being the personal savings allowance, which will mean that - from April 2016 - basic-rate taxpayers will be able to earn £1,000 in savings interest before paying any tax, and higher-rate payers £500.
For most people that will be more than enough to ensure they don't pay any tax on their savings. Which, naturally, leads to the question: 'why do I need a cash ISA if I won't pay tax anyway?'
The answer is that there are distinct advantages to saving in an ISA even if your normal savings are also tax free. Read Martin's full thoughts on why the cash ISA isn't dead, or click the question below for a quick summary.
Why should I still save in an ISA if I won’t pay any tax on interest?
Other top ISA guides...
ISA Transfer: If you're looking to transfer old cash ISAs.
Full ISA: For everything you need to know about ISAs.
Help to Buy ISA: Get up to £3,000 bonus if you're a first-time buyer.
You can save up to £15,240 this year in a cash ISA
You've probably heard of cash ISAs, they've now been around for more than 16 years. They were radically overhauled in 2014, with the amount you're able to save tax-free rising from just under £6,000 to a massive £15,000.
But, as the amount rises each year, you're now able to save £15,240 in an ISA, meaning you won't pay any tax on the interest you get.
Cash ISAs are NOT complicated
Everyone in the UK over 16 has a £15,240 cash ISA allowance. The allowance can be used to max out your cash ISA or stocks & shares ISA - how you split the money is entirely up to you. Plus, from autumn, first-time buyers will be able to choose a Help to Buy ISA, giving them a bonus of up to £3,000 if they're saving towards a house.
The slate's wiped clean at the beginning of every tax year on 6 April, so even if you opened up one just before the tax year ended on 5 April, you can do it all over again now.
There are easy-access and fixed options, just like normal savings. It's that simple. But for some reason many over-complicate them.
Don't be scared. Ideally, we wish we could hypnotise people so when they read "cash ISA", they actually see:
It's a savings account you don't pay tax on.
Know this and it all becomes clearer. Some people don't have a cash ISA because they believe they have to lock their money away. But it's just a savings account - you don't need to lock cash away if you choose an easy-access account.
Still not sure? It's time for an analogy
For years now - whether on TV, radio or in his book - Martin's used the same analogy to explain ISAs. If it ain't broke, don't fix it, so here come the cakes...
Want a Help to Buy ISA? Don't open a normal cash ISA before autumn
The 2015 Budget announced the creation of a first-time buyers' Help to Buy ISA, planned to launch this autumn.
It's Help to Buy because the Government adds money to what you manage to save, to the tune of £50 for every £200 you contribute. We take you through it step-by-step in our Help to Buy ISA guide.
However, you will need to choose between a cash ISA OR a Help to Buy ISA, as you can't have two cash ISAs open in the same tax year and the Help to Buy ISA counts as a cash ISA.
So if you want a Help to Buy ISA, for safety don't open a 2015/16 cash ISA. However, for the savvy, there are ways you can get around this, see below for more.
How can I open a Help to Buy ISA and cash ISA in the same year?
Unlike savings accounts (for now), earn £100 in ISA interest, keep £100
The gain is simple. In a cash ISA, you keep the whole amount - that £100 in interest goes straight into your savings pot without even thinking about stopping for the taxman.
This is unlike a normal savings account where, if you earn £100, you'll only receive £80 after basic-rate tax. After higher rate tax, it's £60.
Source -Here-
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