Individual Savings Account facts for kids
An Individual Savings Account, often called an ISA, is a special kind of bank account in the United Kingdom. It helps people save money without paying tax on the money they earn from their savings. Think of it as a super-saver account!
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What is an ISA and How Does it Help You Save?
An ISA is a special way to save money in the United Kingdom. It was first introduced on 6 April 1999. Before ISAs, there were similar savings plans called Personal Equity Plans (PEPs) and Tax-Exempt Special Savings Accounts (TESSAs).
Why ISAs Are Special for Savers
The best thing about an ISA is that you do not pay any tax on the money you earn from your savings. When you put money into a regular savings account, the bank pays you extra money called interest. Usually, you might have to pay tax on this interest. With an ISA, all the interest you earn is yours to keep, tax-free! This means your savings can grow faster.
How Much Can You Put into an ISA?
There is a limit to how much money you can put into an ISA each year. This limit changes over time. For example, when ISAs first started, you could put £3600 or less into one each year. This limit helps make sure that the tax benefits are fair for everyone.
Different Kinds of ISAs
There are different types of ISAs designed for various ways of saving. Some ISAs are for saving cash, while others are for investing in things like company shares. This gives people choices about how they want to save their money.
