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 circ*mstances can help ensure your money grows as fast as possible.
ISAsare 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 also subscribe to one with a different provider.
This change doesn’t apply to Lifetime ISAs, where it's still only possible to subscribe to one Lifetime ISA in a tax year. HSBC doesn't offer Lifetime ISAs.
From April 6 2024, ISA providers are not obliged to allow subscriptions to more than one ISA of the same type in the same tax year with themselves, and HSBC will not be offering this.
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.
Since 6 April, some providers allow you to make a partial transfer of subscriptions made in the current tax year, but HSBC is not currently allowing this.
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 circ*mstances, you may be charged tax on the interest earned. Some accounts may also have restrictions on making withdrawals.
Easy access accounts
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.
Fixed term accounts
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.
Regular savings accounts
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 anISA can also be passed onto your spouse, or civil partner, tax-efficiently if you pass away. This isn't the case with an ordinary savings account.
However, this depends on your individual circ*mstances 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 oursavings comparison toolto help find the right savings account for you.
The value of any tax benefits described depends on your individual circ*mstances. Tax rules may change in the future.
FAQs
Whether a Cash ISA or a standard savings account is best for you will depend on your circ*mstances. People often choose to invest in ISAs for long-term larger investments and use other savings accounts for smaller short-term savings. However, you should make the decision based on your unique needs and budget.
Which bank gives 7% interest on savings accounts in the UK? ›
What is the interest rate for ISA in HSBC? ›
Key HSBC cash ISA account details: HSBC Cash ISA Loyalty rate: 2.85% AER (2.81% tax free). Fixed for 12 months. HSBC Cash ISA Fixed Rate: 4.45% AER (4.45% tax free).
Where can I get 5% interest on my savings in the UK? ›
Savings accounts with rates over 5%
| Savings Rate | Pay in amount |
|---|
| Barclays Rainy Day Saver | 5.12% | £1 - £5,000 |
| Santander Regular Saver | 5.00% | £0 - £200 (per month) |
| Nationwide FlexDirect account | 5.00% | £1,000 |
| Trading 212 Cash ISA | 5.00% | £1 |
19 more rows5 days ago
Stocks and shares ISAs carry a higher risk as well as a higher potential for rewards, depending on where the money is invested. It's important to work with an independent financial advisor if you're investing in a stocks and shares ISA because there may be a possibility of capital loss.
Where should I put 20k in savings in the UK? ›
You can pay up to £20,000 into a Cash ISA each tax year. Returns on an ISA are tax-free, so you get to keep more of the interest you receive. An alternative to a cash ISA is a high-interest savings account. These work in a similar way to Cash ISAs, but you any interest you receive is taxable.
What is the best bank to put savings in UK? ›
The best easy-access accounts
| Provider | Account name | Interest rate (AER) |
|---|
| Ulster Bank | Loyalty Saver | 5.20% |
| West Brom Building Society | Four Access Saver (Issue 1) | 4.90% |
| Wealthify powered by ClearBank Featured | Instant Access Savings Account * | 4.65% |
4 more rows6 days ago
Notice accounts – what we'd go for
| Provider | Rate (AER variable) | Min/max deposit |
|---|
| Investec* | 5.25% | £5,000/ £250,000 |
| Vanquis Bank | 5.05% | £1,000/ £250,000 |
| The Family BS (no withdrawals) | 5% | Can only save exactly £10,000 |
| Ways to boost your interest. Top rates or cashback from online 'savings platforms'. |
4 more rowsAbout HSBC
We have also increased the interest rate on our Regular Saver to 7.00% AER/gross.
What are the new rules for HSBC ISA? ›
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. 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.
Best cash ISA in the UK - top 10 options compared
| ISA account | Type | Interest rate |
|---|
| Moneybox Cash ISA | Easy access | 5.16% |
| Zopa Smart ISA | Easy access | 5.08% |
| Cynergy Bank Online ISA | Easy access | 4.9% |
| Marcus Cash ISA | Easy access | 4.75% |
6 more rowsJun 28, 2024
Cash ISAs work like other savings accounts, with the added bonus of being tax efficient. You can choose from: fixed rate cash ISAs – which offer you a fixed interest rate over a set period of time. variable rate cash ISAs – which have a variable interest rate over a set period of time.
What does Martin Lewis say about cash ISAs? ›
"For most people with fixed rate cash ISAs, I can't promise everyone, but certainly enough of you very close to the end of it should be ditching them, paying the penalty, and putting them [the money] in somewhere that pays more at the moment."
Which UK bank gives 7% interest on savings accounts? ›
If you're with one of these banks, you could be missing out on up to 7% interest on your savings
| Provider | Product | Interest Rate (AER) |
|---|
| First Direct | Regular Saver | 7% |
| Skipton Building Society | Member Regular Saver (Issue 3) | 7% |
| Nationwide Building Society | Flex Regular Saver (Issue 3) | 6.50% |
| Lloyds Bank | Club Lloyds Monthly Saver | 6.25% |
Feb 6, 2024
Currently, no banks offer an interest rate of 8% on savings accounts. However, some banks provide a 7% APY on checking accounts.
Is it still worth putting money in an ISA? ›
For short-term goals such as an emergency fund or a holiday, ISAs and savings accounts can still be a good place to save up. For long-term savings such as retirement, however, you should consider investing to help your money grow over time.
Should I move ISA to savings account? ›
Normal savings beat cash ISAs for most.
If you won't make this much interest, you won't pay any tax, so should focus on moving your money to the highest interest rate, which is usually in a Top Savings Account.
Can I put $20,000 in an ISA every year? ›
Putting money into an ISA
Every tax year you can save up to £20,000 in one account or split the allowance across multiple accounts.
Does putting money into an ISA reduce tax? ›
ISAs are tax-efficient savings and investment accounts. You can use them to save cash – Cash ISAs – or invest in stocks and shares – Stocks and shares ISAs. An ISA is a 'wrapper' that shelters your investments or savings from tax – helping your money grow more quickly.
