An ISA is still nicer
In April, the Government’s new Personal Savings Allowance (PSA) was introduced, which means it is possible for up to £1,000 to be earned on your savings tax free. So are cash ISAs still a good idea? We think so, and here are five reasons why:
- Profit earned in an ISA does not count towards your PSA. So you can currently save up to £15,240 in an ISA before you need to use any of your PSA.
- Profit earned in a cash ISA will always be tax free. So, if you have multiple ISAs that return a profit of more than £1,000 a year, the current PSA limit for basic rate tax payers, you will still pay no income tax
- ISAs will not incur inheritance tax and so can be passed on to spouses after death
- Cash ISAs can pay competitive returns. For example, our 120 Day Notice Cash ISA pays a table-topping* 1.55% expected profit, and can be opened with just £250
- Your tax situation could change in the future. If you’re a high rate tax payer you get a £500 PSA; if you’re a basic rate tax payer you get £1,000 PSA; whilst if you’re a higher rate tax payer you get no PSA. If you think you may move to a higher tax threshold in the future, you can be confident that your cash ISA deposits are protected from tax at that time.
To find out more about Al Rayan Bank's cash ISA accounts, which are based on the Islamic finance principle of Wakala and provide a Sharia compliant and ethical way to save tax free, please click here or contact us by calling our Customer Services team on 0800 4086 407, via our mobile app, by post or by visiting us in your local branch.
*Moneyfacts 'Compare the Best Variable Rate Cash ISAs' table June: 2016