Two options are Individual Savings Accounts (ISAs) and savings accounts.
While both could help your money grow, picking the right one (or a combination of both) for your circumstances can help ensure your money grows as fast as possible.
ISAs are a tax-efficient way to save money. The government sets a limit for how much can be saved each financial year, and doesn't charge any tax on the interest/income you earn. In the current tax year, this limit is £20,000. There are several types of ISAs including:
Some ISAs have certain conditions and bonuses that can help speed up your saving.
Cash ISA age limit
From 6 April 2024, there are changes to how old you need to be to open a cash ISA.
To open a new cash ISA, you need to be either:
ISA providers aren't obliged to offer the transitional arrangements. HSBC won't allow customers under 18 to open a new cash ISA from 6 April 2024, but will consider changing this in the future.
Subscribing to more than one of the same type of ISA
If you're aged 18 or over, you'll now be able to subscribe to more than one of the same type of ISA in the same tax year – subject to staying within the overall annual limit.
For example, you could subscribe to a cash or stocks & shares ISA with one ISA provider and and also subscribe to one with a different provider.
This change doesn’t apply to Lifetime ISAs, where it's still only be possible to subscribe to one Lifetime ISA in a tax year. HSBC doesn't offer Lifetime ISAs.
ISA providers aren't obliged to allow subscriptions to more than one ISA of the same type, in the same tax year, with themselves. This isn't available with HSBC from 6 April 2024.
Other optional changes that not all providers are implementing
If you've gone a whole tax year without making a subscription to an existing ISA, you can now restart subscriptions without needing to complete a new application.
It’s also now possible to make a partial transfer of subscriptions made in the current tax year.
These changes are not available with HSBC from 6 April 2024. We'll update our website if we make any changes to our ISAs in the future.
You can use a savings account to put away money you don't immediately need in order to earn interest. Depending on your circumstances, you may be charged tax on the interest earned. Some accounts may also have restrictions on making withdrawals.
You can withdraw your money whenever you like without paying a penalty. The interest on these accounts is usually not fixed, so banks may alter the interest rate.
You can put your money away for a set period of time and will earn a fixed rate of interest, but there may be restrictions on how you can access your money.
You can contribute money each month up to a certain limit. These accounts usually offer a slightly higher interest rate than ordinary savings accounts, but there may be restrictions on how you access the money.
If you’re saving an amount up to £20,000, an ISA offers you a tax-efficient way to save.
The value of an ISA can also be passed on to your spouse, or civil partner, tax-efficiently if you pass away. This isn't the case with an ordinary savings account.
There's no annual limit on how much you can put into savings accounts.
With your Personal Savings Allowance (PSA), you can:
However, this depends on your individual circumstances and may be subject to change in future. Additional rate taxpayers do not qualify for a PSA.
Some savings accounts can also offer more flexibility in accessing your money. This can be helpful if you’re not comfortable locking away your money for a set period.
Use our savings comparison tool to help find the right savings account for you.
The value of any tax benefits described depends on your individual circumstances. Tax rules may change in the future.
