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ISA know-how

Meet our ISA experts. They’re here to arm you with all the facts you need to approach ISAs (Individual Savings Accounts) with confidence.

Let’s find your Money-mentum.

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You know what they say, four experts are better than one

Which is why Tulip, Eileen, Emma, and Shen are here to show you how you could reduce the tax you need to pay on your savings – and help boost your Money-mentum.

ISAs are a great way to do this. But we get it, they can seem a bit complicated. There's a lot of jargon floating about and quite a few misconceptions out there.

Our Lloyds Financial Experts will give you the facts, debunk those common misconceptions they hear from customers like you, so you can decide if, and which, ISA or ISAs may be right for you.

See ISAs now

ISA basics

Individual Savings Accounts, ISAs for short, give you the opportunity to earn interest tax-free on your cash savings, and are free from UK income tax and capital gains taxes on any investment returns too. This tax year, you get an ISA allowance of £20,000.

Why choose an ISA?

ISAs are a smart, tax-efficient way to save alongside your Personal Savings Allowance (PSA). It’s important to know what your PSA is, otherwise, you might get taxed unexpectedly.

Everyone has an allowance and if you are close to, or might go over your PSA, then putting money into an ISA, such as a cash ISA, could reduce the tax you need to pay on your savings.

For example, let’s say you have £10,000 in a savings account, earning 5% interest. After 12 months, you’d have gained £500 in interest.

So, if you’re a basic rate tax-payer, that’s half of your PSA for the year. But if you’re a higher rate tax payer, that’s all of your tax-free allowance.

This means that any more interest you earn over that, would be eligible to be taxed. And that’s where ISAs could be really useful.

What’s my PSA?

Facts. And fiction

 

ISAs are for everyone, not just people with a lots of money

People often think that ISAs are just for people with lots of money. But it's not true.

You don’t need a large sum to open an ISA. In fact, you can start with as little as £1 with some of our cash ISAs. And you can open one from age 18 onwards.

ISAs are good for anyone who wants to save and grow their money tax-efficiently, no matter what they earn. Even small, regular payments can make a huge difference over time.

A lot of people will think that it's not for them, because either they're not paying tax on their savings right now. Or they don't have a lot of money to save. But I always say that it's kind of a way of future proofing your tax efficiency.

Emma Lloyds Financial Expert

 
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There’s more than one type of ISA

Although many people think it, there isn’t just one ISA. There are a few types. The two main ISAs to consider are cash ISAs and investment ISAs, of which there are a few different accounts to choose from – each offering different ways to control and access your money.

If you’re new to ISAs, a cash ISA is probably the best place to start. They are low-risk and hence offer steady, predictable growth.

Some cash ISAs come with easy access, should you need to get to your money quickly in the short-term, and others offer fixed rates, typically one or two-year, where you can’t access your money early without a penalty.

If you’re thinking of saving in the short or long-term, ISAs have to be the first place to look, before anything else.

Shen Lloyds Financial Expert

 
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It's never too late to open an ISA

Many people think they're too old to take out an ISA. This is, of course, wrong.

No matter how old you are, you can still benefit from tax-free allowance.

Even though you might feel you've missed out in the past, it doesn’t mean you should miss out on tax-free savings in the future.

One of our customers had been saving for years in a traditional savings account and had amassed a large sum – but was also being taxed on those savings. Once we made him aware of the advantages of switching to an ISA, he was immediately able to take advantage of saving tax-fee on his first £20,000. Better still, as he was saving jointly with his wife, she was able to use her allowance of £20,000 as well.

Eileen Lloyds Financial Expert

 
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You can have multiple ISAs

Another misconception, that often comes up, is that you can only have one ISA.

The truth is, you can have both a cash ISA and an investment ISA at the same time, as long as you’re within your allowance.

That way, you can cover all the bases – by having a low-risk cash ISA, which is perfect for short-term goals, like a holiday. And a higher risk investment ISA, which is good for those longer-term goals, like the deposit for buying a house.

And you can also transfer all, or some, of your money into your different ISAs as your life, and goals, change.

From the big day to a bigger house

How Tulip uses ISAs to grow her money.

Our Financial Expert, Tulip, shares how she looks to use cash and investment ISAs to achieve her changing goals. 

I've been saving and sacrificing for years to afford my dream wedding. A cash ISA, with the tax-free benefits, has been perfect for this as I need as much in my pocket as possible. Also, the easy access has been a godsend, as there have been so many vendors to pay, from florists to caterers. Once the wedding's paid for, I'll carry on saving the same amount of money each month. I’m so used to the habit now and it’s really paid off. But, instead of putting it into a cash ISA, I'll open an investment ISA. That'll help my money work harder towards my long-term goal of buying a bigger home.

Tulip Lloyds Financial Expert

Tax treatment depends on individual circumstances and may be subject to change in the future.

ISA rules

Here's some of the key rules and legal stuff you need to know about ISAs.

Multiple ISAs

Since recent changes in ISA rules, you can now pay into two different types of ISAs in the same tax year. So, you could put £10,000 into a cash ISA and £10,000 into an investment ISA.

£20,000 yearly allowance

Some people think you need a new ISA every year once you hit the £20,000 limit, but it’s actually an annual allowance. You don’t have to open a new ISA on April 6. You just top up the one you already have. It’s the allowance that resets on that date, not the ISA itself. So, if you have any money sitting in your savings account, make sure you get it into an ISA before April 5 to make the most of this year’s allowance.

Junior Cash ISA

You can save up to up to £9,000 tax-free in a cash JISA (Junior Individual Savings Account) for children under 18, every year.

Discover JISAs

 
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Get picking

We hope our experts have given you a ‘useful’ piece of their collective minds, but if you want to explore further just which ISA is right for you, click on the link below.

Compare ISA products

Your money is protected

Investments totalling up to £85,000 are protected by the Financial Services Compensation Scheme. This limit applies to the combined total of stocks or cash holdings in these brands that we administer.

This is in addition to any savings you hold across Lloyds Banking Group.

Important legal information

Lloyds and Lloyds Bank are trading names of Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.

The Lloyds Bank Direct Investments Service is operated by Halifax Share Dealing Limited. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Registered in England and Wales no. 3195646. Halifax Share Dealing Limited is authorised and regulated by the Financial Conduct Authority under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.

AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. As every advertisement for a savings product, which quotes an interest rate, will contain an AER you will be able to compare more easily what return you can expect from your savings over time.

The tax-free rate is the contractual rate of interest payable where interest is exempt from income tax.