If you’re reading this, you may have researched the benefits of our Individual Savings Accounts (ISAs) - helping to create a positive future for people and the planet. Great! Yet sometimes people can start to feel overwhelmed by the rules, acronyms, and exceptions of ISAs. If this sounds familiar, then do read on.
Overall, it’s important to remember that ISAs are fundamentally a way of saving or investing tax efficiently, enabling people to make more of their money. So, no need to let jargon or acronyms stop your ISA journey before it begins.
To help, we asked Hannah Duncan, journalist and freelance investment writer, to outline five golden rules of ISAs to live by.
While this article is intended to be helpful, it is not advice. Please be aware that with investing comes risk, and there is a chance that you may get back less than you put in.
1. You can save or invest up to £20,000 per tax year
Annually you can deposit up to £20,000 into an ISA. This money will benefit from some serious perks, such as zero income tax. Plus, no capital gains tax on investments.
But if you don’t use it, you lose it. The £20,000 allowance re-sets every year and any unused allowance will not be carried over.
2. You can have more than one ISA
Whatever your motivation is for opening an ISA, you can have more than one type and can split your £20,000 allowance across several. Triodos Bank offers a Stocks & Shares ISA, Cash ISA, Innovative Finance ISA, and a Junior Cash ISA. The best part is that you can mix and match to create a tax-efficient solution that’s best for you.
But there’s a catch! You can only open one of each type of ISA per tax year, so it’s wise to think carefully before choosing which one to open.
3. Despite the name, you can save and/or invest with an ISA
The name (Individual Savings Account) often causes confusion as it implies it’s purely a way of saving money, but it isn’t. It also applies to investment ISAs and Triodos Bank has two on offer – Stocks & Shares ISA and Innovative Finance ISA. These enable customers to invest either globally through impact investment funds or locally through the crowdfunding platform.
4. It’s easy to transfer ISAs
You’re not locked into an ISA and that’s key, as your financial planning requirements often change. You can even transfer a Cash ISA to an investment ISA, and vice versa. It’s very straightforward to transfer to Triodos - just open your new ISA and then complete a transfer form. This will ensure you retain the tax benefits of your transferred ISA.
For stocks and shares ISAs, it may take around two weeks to transfer in order to sell your investments, so be sure to plan ahead. If you are considering selling your investments, remember that it’s generally not recommended within the first five years. This is because there’s more risk that you’ll get back less than you put in.
5. ISAs can reflect your values
It may seem hard to believe, but where you chose to save or invest your money can make a real difference to humanity and the environment. If your current ISA provider isn’t putting the planet first you might be ready to start again with an ISA that does.
ISAs from Triodos Bank
It’s simple to open an ISA with Triodos, and it only takes a few minutes. So why not find out more about how your money can have a positive impact on people and planet, while saving you tax.
Do remember that investment carries risk and isn’t the same as putting your money into a savings account as you may not get back what you put in.
The tax benefits of an ISA are subject to change and depend on individual circumstances.