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The new tax year starts on 6 April each year, which makes February to April the perfect time to take a look at your Individual Savings Account (ISA) to see if your money could be working harder.

1. You can save or invest in different ways

There’s a lot of choice when you’re saving into an ISA Link opens in a new window. If you’re new to saving or investing this way then it can seem really complicated but here’s the different options broken down:

Cash ISAs

If you want to save cash then you have the same choices as you would with a standard savings account, with the added benefit of your money being in the ISA wrapper. You can open a straightforward easy access ISA, where you can get the money out whenever you want. Or you can lock the money away in a fixed rate ISA that typically pays a higher rate, but access may be limited (whereby early withdrawals may result in a penalty in the form of lost interest).

If you need help getting into the savings habit then there are regular saver Cash ISAs, which allow you to put aside a regular monthly amount and sometimes incentivise you to do so by paying extra interest.

Stocks and Shares ISAs

If you want to go beyond saving in cash there are even more options. You can invest your money in a Stocks and Shares ISA Link opens in a new window – don’t worry, these are designed to be easy to use. You don’t have to be some sort of stockbroker wheeler-dealer to understand them. But do be aware: while the returns on your investment could be higher than the returns on your savings, there’s an element of risk as the investments you choose can be affected by the ups and downs of the stock market, meaning you may get back less than you invest.

Innovative Finance ISAs

There are even Innovative Finance ISAs (where you lend your money to companies or individuals as a loan) so you can keep any peer-to-peer lending investments in a tax-free wrapper too.

Lifetime ISAs

If you’re aged between 18 and 40 and saving towards your first home or retirement then you can save into a Lifetime ISA. You can put a maximum of £4,000 into a Lifetime ISA each tax year and the maximum bonus you can earn in a tax year is £1,000. Please note, if you withdraw money from your Lifetime ISA for any reason other than purchasing your first home or reaching the age of 60+ then you could face a withdrawal charge.

Remember, you can have more than one Cash ISA and Stocks and Shares ISA open at the same time, but you can only subscribe to one of each, per tax year. There’s a lot of choice but don’t be intimidated, it’s all really straightforward - ISA providers will happily give you information on the different options or check out the gov.uk website Link opens in a new window.

2. You can transfer your current ISA pot

This is important for both newbie and established ISA holders. You can transfer some or all of your ISA balances, whether cash or stocks and shares, to a better account; you don’t have to leave your existing money languishing at a less-competitive rate or in investments that are no longer meeting your needs.

In fact, the new tax year is often a time when banks up their game to attract new customers so there can be some highly competitive offers. Just check that the ISA you’re looking at says it accepts transfers-in and look out for any transfer charges that may apply.

Whatever you do, don’t withdraw your money to pay it into the new account – once it’s out you’ll lose its tax-free status and any payments in will count towards the current tax year’s allowance instead. You must ensure you move your money directly from ISA to ISA using the bank’s transfer-in service Link opens in a new window, if you want to keep your savings tax-free.

Also, if you choose a cash ISA, take a look at whether there’s an introductory bonus rate. When it ends, the rate may become less competitive, so you want to keep that date in mind.

3. You can often increase your payments

If you’re making a regular payment into an ISA then you’re doing amazingly well. Even small regular payments all add up over time.

If you’re paying monthly into a regular saver cash ISA, it’s a good idea to double-check what you’re allowed to do. Many regular saver cash ISAs cap the amount you can save each month but some providers have increased the amount and others now let you carry over any unused monthly allowance. That means you could increase payments or potentially even add a lump sum.

4. The earlier the better

Saving is good whenever you do it, but with an ISA, the earlier you can save in the tax year, the sooner you can benefit from the annual ISA allowance. If you have a lump sum ready to pay into an ISA then the start of the year is the optimum time to do so.

For example, if you open a Cash ISA at the start of the 2022/23 tax year and you have the maximum £20,000 ready to save (you lucky thing) then a cash ISA that pays 2 percent would see you earn a tidy sum by the end of the tax year (£400).

If you were to pay in early in the tax year to a Stocks and Shares ISA your selected investment will benefit from more time in the market. This could lead to more growth although this is not always the case with the ups and downs of the stock market.

Remember, you may get back less than you invest. Investing is a medium to long-term commitment so you should be prepared to invest your money for at least five years. Tax depends on your individual circumstances and the regulations may change in the future.


From Cash ISAs Link opens in a new window to our award-winning Stocks and Shares ISAs Link opens in a new window, we’ve got you covered. We’ll even do all the hard work for you if you’re looking to transfer an existing ISA to us Link opens in a new window.

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