Savings accounts

IMPORTANT FACTS- NISAs- (New Individual Savings Account, replacing ISAs)

• A tax free savings account- you don't pay tax on on the interest from a cash NISA, and you don't pay tax on any income or capital gains you've made on investments in a Stocks and Shares NISA.
• You can save a maximum amount per tax year in one of these - currently £20,000 per tax year for 2018-19.
• This £20,000 can be in any combination of cash and/or shares (previous limits have been scrapped)
• Anyone aged between 16 and 18 can hold a cash NISA, but not a stocks and shares NISA
• You can withdraw money from a NISA at any time without losing tax benefits. However, this does not re-set that allowance. If you save up to your entire ISA allowance then withdraw some money, you can’t put anything else back into your ISA in that tax year.

VIDEO- Martin Lewis, Money saving expert, explains NISAs (the key information is in the first 3 minutes)

IMPORTANT FACTS- Junior NISA

• The Tax Free Junior ISA was brought in to replace the Child Trust Fund in 2011.
• Any child (under 18) who is resident within the UK and who isn't eligible for a child trust fund can hold a Junior NISA Account.
• Anyone who has an interest in the child’s financial future can pay into their Junior NISA Account as long as the annual contribution limit is not exceeded.
• Once the child has reached adulthood (currently 18 years of age) they are able to withdraw their cash whenever they want without losing any tax benefits.
• The Junior NISA limit is £4,260 per tax year for 2018/19.
• Money can be invested in cash or stocks and shares . The limit applies to the total of both types.

IMPORTANT FACTS - LISA's - Lifetime ISA

• A new savings account in which you can add up to £4000 each year
• At the end of each tax year the government will add a 25% bonus to your contributions e.g. you put in £4000, the government will top up your saving by £1,000,
• The upper limit of bonuses you can recieve over the lifetime of the product is £32,000
• It is open to 18 - 39 year olds
• Tax free funds can only be used to buy a first home worth up to £450,000 OR used as pension and be withdrawn from age 60.
• You can transfer LISA funds between providers in the same way you can with normal bank accounts

IMPORTANT FACTS- Child Trust Fund- closed scheme- only for those with existing accounts

• A long-term tax-free savings account for children born between 1 September 2002 and 2 January 2011.
• Under new rules, Child Trust Funds can be converted to Junior ISAs (that tend to have higher savings interest rates). Children can have either a Child Trust Fund or a Junior NISA, but not both.
• Anybody can put money into the child’s account. The child will be able to withdraw the money from the account when they reach 18.

VIDEO- This gives a good overview of the types of savings accounts available.