If you’ve opened a newspaper or read the news online recently, you’ve probably come across the term ‘Isa season’ which focuses on how you should use your Isa allowance before the end of the tax year.
But, what does it actually mean and why should you be taking advantage of it?
In a nutshell, with normal savings accounts, any interest you make is taxed. So, say for example, you deposit £10,000 in a 12-month fixed term deposit account paying 1.93% interest. At maturity, you’ll make £193 in interest, which will be taxed at up to 45%, depending on the tax bracket you belong to. With an Isa, however, you can, at the moment, save up to a maximum of £20,000 a year and any interest you make on that £20,000 will be tax free.
At OakNorth, we offer a range of savings products for individuals: fixed term deposit accounts ranging from six months to five years, easy access and notice accounts, as well as easy access and fixed rate cash Isas. Since our launch in September 2015, we have attracted over 40,000 deposit customers, enabling them to make their money go further.
Our current Isa range gives savers a choice between two types of Isa products: a personal easy access cash Isa and a 12-month fixed rate cash Isa. Both require a minimum deposit of £1,000 to open an account and a maximum balance of £250,000. However, we’re about to strengthen our offering further with the launch of a 24-month fixed rate cash Isa and a 36-month fixed rate cash Isa.
Some things to be mindful of:
- The deadline: the end of the tax year is 5th April, so if you want to take advantage of your £20,000 tax-free subscription limit, you need to open and fund your account before then.
- Compare the market: one of the best tips we can provide is to shop around for the best product for your needs — do your research online through price comparison websites, read the personal finance pages of the national newspapers and look at the best-buy tables.
- Review the reviews: it’s also worth looking into the customer experience of the provider you’re considering.
- Make sure the provider is the right fit for your needs: while rates and reviews are important, it’s also worth looking into how you can open and manage your account. How simple is the process? How long will it take you? How can you manage it going forward?
- Make sure the product is the right fit for your needs: there are several different types of Isa products available in the market: cash Isas, which we offer, stocks and shares Isas, Help to Buy Isas, Innovative Finance Isas, junior Isas and lifetime Isas. Doing your research will enable you to find the product that best fits your needs and is most aligned with your savings goals.
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