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31st April 2021

Saving for a rainy day or just looking to get into a savings habit? A tax free ISA could be one of the ways to help you make the most of your money. But with a wide variety of options, and strict rules, you may need a little help to find the ISA that is best for you.

Here we answer your ISA questions.

I have been saving in ISAs for the last few years, but I find it hard to keep track of balances with different providers? If I transfer them all into one place, will it affect my ISA allowance for this year?

You can transfer an entire balance between different types of existing ISAs without affecting your allowance for the current tax year.

However, you can only open one new cash ISA, and one new stocks and shares ISA each year.

My older sister used a help-to-buy ISA to save for the deposit on her first home. I want to do the same, but I can’t find a help-to-buy ISA. Are they still available?

Help-to-buy ISAs were discontinued in 2019, but they have been replaced by Lifetime ISAs, which are designed for long term saving for a home.If you are a first-time buyer aged between 18 and 39, you can save up to £4,000 a year in a Lifetime ISA. The government will add a 25% bonus to your savings, up to a maximum of £1,000 a year. The Lifetime ISA limit of £4,000 will count towards the £20,000 ISA limit for the tax year between 2021 and 2022.

Is a Lifetime ISA the same as a pension?

No. Pensions and Lifetime ISAs have different tax considerations, as well as different investment limits and rules, depending on your own personal situation.

Retirement planning can be complex, and you should take expert advice before you make any decisions.

I am interested in investing in the stock market - how does a stocks and shares ISA work?

A stocks and shares ISA invests your money in the stock market - if the value of your investments rise, so does your ISA fund value, but if those investments fall, you will lose money. There are also fees which are deducted from the value of your fund.

Many ISA providers will select and manage your investments for you, based on your chosen level of risk.

We have just had our first child, and my in-laws have given us a generous gift of £1,000 to start saving for the baby. We want to start a junior ISA, but my in-laws are already using their full ISA allowance. What can we do?

Congratulations, and what a great way to give your baby a healthy financial start in life.

The good news is that you can save up to £9,000 into a junior ISA in the 2021 to 2022 tax year. And anyone, such as grandparents, can pay in without affecting their own allowance.

Parents or guardians manage the account, but the money belongs to the child, who takes control of the account at 16, and can withdraw the money from the age of 18.

This means if you put money into a junior ISA for a child, you cannot withdraw it yourself at a later date.

Tax treatment depends on your individual circumstances and may change. This is not intended to give financial advice or a personal recommendation. If you need a personalised recommendation based on your personal circumstances, you should seek the advice of your financial adviser.

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