With the introduction of ISA (individual savings account), now there is a way to save more money, without worrying about paying personal taxes on the interest or return you earn. It is introduced by the government in order to motivate people to save more money. This article will help you to discover the best ISA option. At present there are two types of ISA being offered:
1. Cash ISAs
Cash ISA or Cash Individual saving account is a type of account where you can save your money and there is no need to pay any taxes on the return.
2. Stocks and shares ISAs
These types of Individual savings accounts allow you to invest money in shares and stocks without having to pay capital gains tax on the money you make through the value of your shares. There is no personal tax to pay on the money you make from corporate bonds and gifts.
You also don’t need to pay the extra 22.5% higher rate or 32.5% additional rate tax on the gross dividends from shares held in an ISA, if you are already paying a higher or additional rate tax.
A cash ISA is like a normal savings account where you save your money but you do not have to pay the income tax on the interest you earch. There are some cash ISAs where you get fixed rate accounts for fixed term accounts and in some cases accounts are offered for instant access. In comparison to cash ISA, stocks and shares ISA allows you to invest in the stock market.
Stocks and shares ISA are classified as Tax-Efficient. That is because the returns are free from the UK Income and capital gains taxes, but there are other taxes which are payable and depends on the investments.
Like taxes on dividend account which cannot be reclaimed. In addition to it, as your money is invested into the stock market, the value of your investment will rise or fall on the market conditions, so there is a possibility that you might end up with less than what you originally invested.
There is also an option for getting Junior ISA account for your children. You can earn 3.00% tax free/AER interest rate. It is possible to get Junior ISA account for the children of age under 18 years. After the maturity, Junior ISA account gets converted into adult ISA account. The best thing about Junior ISA is that anybody can deposit the amount in the account.
Now learn about the ISA allowance: Cash ISA saver plan offered by Lloyds TSB is an amazing way to not only save money, but earn interest which is tax free. With Lloyds TSB offered Cash ISA saver plan, you get 1.00% tax free/AER on balances of £5,000 or more. You can open the cash ISA saver account with just £1. This rate includes an introductory bonus of 0.50% which is fixed and over the period of 12 months from the date of account opening. After this period, you get the variable rates without bonus.
The maximum limit to save money in a financial year is £5,760.You can also make instant withdrawal with just £1. Using the convenient Internet Banking interface, you can easily manage your account. There are four types of cash saver account available from Llyod TSB – Cash ISA saver, Two year fixed rate cash ISA, Three year fixed cash ISA and four year fixed rate cash ISA.
Cash ISA saver plan is one of the best ISA plan being offer in UK by Lloyds TSB and if you are considering to get an ISA account for yourself, you should look no further than Lloyds TSB.