Finding the right cash ISA

ISA 650 X 300

April 6th marked the start of the new financial year. A new tax year means a new Individual Savings Account (ISA) allowance for everyone over the age of 16 in the UK. This allowance means that you can save up to a maximum of £20,000 – and enjoy a tax free return on any expected profit earned.

Here are the basic rules to make the most of your ISA allowance:
• You must be a UK resident and over 16
• You can open a cash ISA from the first day of the new tax year and add savings to it until the end of that tax year (5 April 2019). Depending on the conditions of the cash ISA.
• You can only pay into one cash ISA and one stocks and shares ISA each tax year and the money in both must not add up to more than £20,000
• You keep all cash earned on your savings. The Personal Savings Allowance (PSA) means that currently, basic rate taxpayers can earn up to £1,000 profit on savings income tax-free, and higher rate taxpayers up to £500. However, as money in an ISA is exempt from tax it will never count towards your Personal Savings Allowance
• If you’re married, both you and your partner have an allowance each, meaning that you can save up to £40,000 in two ISAs – earning profit for your household.

The following questions have been designed to help you decide what you could do.

Do you already have an ISA?

Yes. You may wish to consider transferring your money to get a better return. Never withdraw the money from your current provider yourself as you will lose all the tax benefits immediately. Instead, speak to your new provider, who will take care of all the arrangements for you, while making sure that you keep all the benefits. Al Rayan Bank accepts transfers on all of our ISA accounts. Find out more here.
No. Consider the next set of questions

Do you need to access your cash quickly?

Yes: Shop around for the best Instant Access Cash ISA deal, allowing you access to your money when and where you need it, without losing profit. Al Rayan Bank offers an Instant Access Cash ISA with an attractive expected profit rate. You’ll need £50 to open this account, after which you can deposit and withdraw funds online, through the post or at any of our branches. Check out our latest expected profit rates here.
No: Decide how long you could lock your money away for and search for a Fixed Term ISA. These accounts limit access to your cash in exchange for a higher expected profit rate. You can find out the latest details of Al Rayan Bank’s Fixed Term Deposit Cash ISAs here.

Can you leave your cash in an ISA for 12 months?

Yes. Have a look for a fixed term ISA for 12 months that will reward you with a higher profit rate. Al Rayan Bank currently offer a 12-month Fixed Term Deposit Cash ISA. There is a minimum deposit of £1,000 and additional transfers and deposits can be made in the first 30 days after opening the account. More details can be found here.

Can you leave your cash in an ISA for longer than 12 months?

Yes. Search for a fixed term ISA that will reward you with a higher profit rate. Al Rayan Bank currently provide a 24-month Fixed Term Deposit Cash ISA with a generous expected profit rate. There is a £1,000 deposit and additional transfers and deposits can be made in the first 30 days after opening the account. Find out more here.

Do you have a lump sum to invest?

Yes. A Fixed Term ISA will enable you to earn tax free profit – the rate will depend upon how long you can lock your savings away for.
No. Any amount you can invest and add to in an ISA will start earning profit that will be tax free – you’ll be surprised how quickly your profit could soon add up.

If you choose an ISA from Al Rayan Bank, you can be sure that it will be ethically operated under the Islamic finance principle of Wakala. We invest money in reliable, Sharia-compliant enterprises to support ethical business and generate profit in accordance with the values of Islam.
While this means that the returns are an ‘expected profit’, all investments are closely monitored and Al Rayan Bank has always achieved the expected profit rates.

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