Did you know, opening an Isa has just become even easier?
Okay, it was never too hard, but this week it has become really ‘easy’ – because everybody’s favourite entrepreneur, Stelios, has just launched the ‘easyIsa’.
If you don’t know Stelios, you will know his companies – anything that begins with the word ‘Easy’.
You’ve heard of easyJet, but have you heard of the other 28 ‘Easy’s’ in the Easy Group? How about his online shopping company easylife, or easyPizza, easyGym, easyFoodstore, easyLimousines – and for pet lovers, there’s even easyDogwalker, offering grooming and walking services.
The easyIsa is a celebrity reminder that we have just a few weeks left to use up this year’s £20,000 Isa allowance, before the sun sets on the current tax year on April 5th.
An Isa, as you may know, is simply a savings account where you never pay tax.
Isas were introduced in 1999, offering us a tax break as an incentive to save, and have been a big hit ever since. If you already have one or more Isas, and want to save more or ‘max out’ this year’s allowance, you need to get your skates on. If you have some savings elsewhere, and are thinking of opening an Isa this financial year, then equally, don’t leave it much longer.
While there are a growing number of Isas and Isa types, all you need to remember is that it’s saving tax-free.
The Cash Isa invests in cash and as such, just like Theresa May’s government, it is ‘strong and stable’.
The Stocks & Shares Isa invests in the stock markets, and so has a wee bit more risk, in the hope of a better return over the long term (10+ years).
Thinking of buying a house? Then the Lifetime Isa is for you! It allows you to save up to £4,000 a year, for one of two purposes: either for a deposit on your first house, or for your old age.
Then there’s the Help to Buy Isa, for first-time homebuyers only, where you can save up to £3,400 this year. Best part of the Lifetime and Help to Buy models is the 25% top-up: for every £4 you save, the government adds £1 to top it up to a fiver!
Then there’s the Innovative Finance Isa. This is a higher-risk proposition based on what’s called peer to peer (or P2P) lending – you are lending your money to other people or businesses. Stelios’s easyIsa is one of these.
Oh, and let’s not forget the younger audience: the Junior Isa is a tax-free savings account specially for under-18s. Parents can open one for their child and it’s a really handy bucket where the relatives can throw in a few bob on birthdays, rather than just handing them cash to blow on another Xbox game or new pair of jeans!
Now, admittedly, with the Bank of England base rate flat on its belly, this decade has hardly been ‘thrill city’ for savers, and interest rates on all savings accounts have been pretty dire. The four best easy access cash Isa rates at the moment are AA, Paragon, and Virgin Money (all offering 1.16%), and top of the class is Leeds BS offering 1.21%. Best of a bad lot, though - these rates are a bit better than keeping it in the mattress, but not much.
You’ll do a bit better if you choose a Fixed Rate Isa, where you agree to put your money away for a set length of time in return for a better rate of interest. OakNorth Bank’s fixed Isa offers 1.46% for one year, and United Bank UK’s one-year Isa is 1.87%.
So if you’ve been thinking about an Isa for a while, or if you want one of the newer types, or if you’ve just become a family and want to open a Junior Isa for your new arrival – pick up the phone to your advisor this week, to catch the tail-end of this financial year’s allowances.
As Stelios would say: it’s easy!
:: Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005 . Further information is on the Facebook page 'Kennedy Independent Financial Advice Ltd'
