The main benefit of an ISA is you can save, or invest money, without paying income tax on any earned interest, or capital gains tax.
If you are over 18 and eligible to subscribe, you can save up to £20,000 this tax year in an ISA without paying UK Income Tax or Capital Gains Tax on the interest.
The maximum amount you can deposit in an ISA is subject to annual subscription limits. The annual subscription limit for the current tax year is £20,000. From 6 April 2024, for customers aged 18 and over, ISA regulations allow this to be saved in multiple cash ISAs, multiple stocks and shares ISAs, multiple innovative finance ISAs or up to £4,000 into one lifetime ISA with either the same or different providers in the same tax year.
You don't have to declare interest earned or capital gains on savings, or investments, up to that amount on your tax return, so it's tax free. But keep in mind, these rules may be subject to change in the future.
Cash ISAs work like other savings accounts, with the added bonus of being tax efficient. You can choose from:
Interest rates will vary depending on the bank, or building society, you choose.
These enable you to make investments without having to pay income tax, or capital gains tax, on any profits made.
Stocks & shares ISAs give you the potential to earn a greater rate of interest than other savings. But it’s important to remember the value of investments can fall as well as rise and you may not get back what you invested. They should also be considered a medium- to long-term commitment, so you should be prepared to hold them for at least 5 years.
These are designed to help you save for your first home, or for later life. You can hold both cash and investments within them. They're available for people aged under 40 and you can save up to £4,000 a year, up until the age of 50.
The Government will top up your savings, adding 25% up to a maximum of £1,000 each year. You'll pay a 25% charge to withdraw from this type of ISA unless you use it to buy your first home, or you're aged 60 or over.
HSBC doesn't currently offer lifetime ISAs.
This is an ISA that contains peer-to-peer loans instead of cash, or stocks and shares.
HSBC doesn't currently offer innovative finances ISAs.
From 6 April 2024, for customers aged 18 and over, ISA regulations allow you to save in multiple cash ISAs, multiple stocks and shares ISAs, multiple innovative finance ISAs or up to £4,000 into one lifetime ISA with either the same or different providers in the same tax year.
Customers aged 18 or over will only be able to subscribe to one type of cash ISA and one type of stocks and shares ISA in the same tax year with either HSBC or first direct. However, even if you subscribe to an ISA with HSBC (or first direct) you will still be able to subscribe to ISAs with other ISA providers (subject to eligibility and availability).
The value of an ISA can 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. For this to take place, the Government requires you:
Regardless of what type of savings account you choose, saving can help you manage your finances. See some tips on how to boost your savings balance.
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.
