Making the most of your ISA allowance
An Individual Savings Account (ISA) is a tax-free savings account which means you will not have to pay tax on any profit you earn, up to the maximum allowance.
Can I open an ISA now?
Yes. April 6 2018 – April 5 2019 is the tax year, and you can open an ISA and pay money into it at any time within this period. You may only hear about ISAs at the start of the tax year as this is when ISA providers typically advertise their rates of return but they are available all year round.
I can’t afford to invest £20,000. Is it worth me opening an ISA?
Yes. £20,000 is the current allowance – or maximum – you can invest in an ISA this tax year. Although there may be a min deposit required, depending on the ISA you choose, you do not have to invest the full £20,000. Any amount you invest in an ISA will start earning profit that will always be tax free – and you’ll be surprised how quickly any profit will soon add up.
Can’t I earn up to £1,000 on other saving accounts?
Yes, but with an ISA, you get to keep all the money earned on your savings tax free, up to the max allowance. From April 6 2016, the Personal Savings Allowance means that basic rate taxpayers are able to earn up to £1,000 in a savings account tax-free. Higher rate taxpayers are able to earn up to £500. However, as all the money in an ISA is exempt from tax it will not count towards your Personal Savings Allowance.
I’m married, can we both open ISAs?
Yes. You and your partner have an allowance each, meaning that you both can save up to a total of £40,000 in two ISAs.
I need access to my cash – don’t I have to leave my money in an ISA?
Not necessarily. A rule of thumb is that the longer you can leave your money in an ISA the more return you will earn, but instant access ISAs are also available. Al Rayan Bank offers an Instant Cash ISA. You can check out the latest expected profit rates here. You’ll need a £50 deposit to open this account, after which you can deposit and withdraw funds online, through the post or at one of our branches. You can also transfer existing ISA balances in. Find out more here.
Can I leave my money in an ISA for a year to earn extra expected profit?
Yes. A fixed term cash ISA for 12 months, or longer will reward you with a higher expected profit rate. Al Rayan Bank offer a 12-month fixed term ISA, with a competitive expected profit rate. You can check out the latest expected profit rates here. 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. Find out more here.
Can I leave my money in an ISA for more than a year?
Yes. A fixed term cash ISA for 24 months will reward you with a higher expected profit rate. Al Rayan Bank provides a 24-month fixed ISA with a generous expected profit rate. You can check out the latest expected profit rates here. 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.
With Al Rayan Bank you can be sure that whichever cash ISA you choose profit will be generated true to Islamic teachings, under the Islamic principle of Wakala. We invest money in reliable, Sharia-compliant activities to support ethical business and generate profit in accordance with the values of Islam.