Get a mini and you won't feel exposed

Mini cash ISAs have confounded the sceptics and made saving simple

With £11.5bn invested so far this tax year in mini cash individ-ual savings accounts (ISAs), their popularity is set to exceed even last year's bonanza.

With £11.5bn invested so far this tax year in mini cash individ-ual savings accounts (ISAs), their popularity is set to exceed even last year's bonanza.

When ISAs were launched in April 1999, it was the mini cash version that particularly attracted investors. While maxi ISAs seem complicated, with their stocks and shares, cash and insurance elements, a mini cash ISA is simple to understand - a maximum of £3,000 can be invested this tax year. Even better, they promise steady growth with the absence of risk, as your money is not gambled on the stock market.

Investors are also rushing to take advantage of the £3,000 allowance that Gordon Brown, Chancellor of the Exchequer, had intended to reduce to £1,000 this tax year. In the last Budget he relented, however, and decided to keep the £3,000 allowance for another year. There are calls for this to remain permanent, since £1,000 is argued to be too little to form a useful investment.

Investing in a mini cash ISA is tax-efficient, as all interest received or credited remains untouched by the Inland Revenue. There are plenty of choices on the market for investors, with current best rates from Alliance & Leicester (7 per cent), Nationwide (6.85 per cent), and Britannia (6.85 per cent).

Although there was a certain amount of scepticism when mini cash ISAs were introduced, providers quickly realised they would prove popular. "When they were launched there was some cynicism," says Lise Bullock, public relations manager at Britannia. "But this has proved unfounded as [they have] been a great success."

If you have a mini cash ISA that you started last year, you may be tempted to invest more money with the same provider this year. But the beauty of ISAs is that you can shop around and choose a different bank or building society, which might offer a better rate.

Investors with mature Tessas (tax exempt special savings accounts) can also roll their money over into a mini cash ISA. This can be done without affecting this year's allowance, on condition that your provider transfers the money for you.

If you close your Tessa and withdraw the money so you can put it into an ISA, it will be treated as a separate transaction - you will in effect be eating into this year's allowance.

Mini cash ISAs are more flexible than Tessas, which required that you leave your capital untouched for five years. With an ISA, there is no such requirement, so you are free to withdraw your money as you wish.

CAT standard (low cost, easy access, simple terms) cash ISAs require that savers should be able to access their money without limits on the number of withdrawals made and without incurring charges on those withdrawals. This is useful if you are on a modest budget and are not sure about committing cash for a full five years.

Although you can withdraw your money within a mini cash ISA, if you invest your full £3,000 allowance and then take out £500, you cannot replace that money in the same tax year.

Risk-averse investors can also opt for National Savings products within a cash ISA. As they are part of the Government's high street savings operation, they are considered to offer the highest degree of security, although the rates may not be as competitive as those on offer from banks and building societies.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
people
News
people And here is why...
News
peopleStella McCartney apologises over controversial Instagram picture
Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
PROMOTED VIDEO
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
News
i100
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
News
people
News
The village was originally named Llansanffraid-ym-Mechain after the Celtic female Saint Brigit, but the name was changed 150 years ago to Llansantffraid – a decision which suggests the incorrect gender of the saint
newsWelsh town changes its name, but can you spot the difference?
Arts and Entertainment
Kristen Scott Thomas in Electra at the Old Vic
theatreReview: Kristin Scott Thomas is magnificent in a five-star performance of ‘Electra’
News
Destructive discourse: Jewish boys look at anti-Semitic graffiti sprayed on to the walls of the synagogue in March 2006, near Tel Aviv
peopleAt the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Life and Style
Couples who boast about their relationship have been condemned as the most annoying Facebook users
tech
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    Day In a Page

    Italian couples fake UK divorce scam on an ‘industrial scale’

    Welcome to Maidenhead, the divorce capital of... Italy

    A look at the the legal tourists who exploited our liberal dissolution rules
    Time to stop running: At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity

    Time to stop running

    At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
    Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

    Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

    The vintage series has often been criticised for racial stereotyping
    An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

    An app for the amorous

    Could Good2Go end disputes about sexual consent - without being a passion-killer?
    Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

    Llansanffraid is now Llansantffraid

    Welsh town changes its name, but can you spot the difference?
    Charlotte Riley: At the peak of her powers

    Charlotte Riley: At the peak of her powers

    After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
    She's having a laugh: Britain's female comedians have never had it so good

    She's having a laugh

    Britain's female comedians have never had it so good, says stand-up Natalie Haynes
    Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

    Let there be light

    Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
    Great British Bake Off, semi-final, review: Richard remains the baker to beat

    Tensions rise in Bake Off's pastry week

    Richard remains the baker to beat as Chetna begins to flake
    Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

    A look to the future

    It's time travel fashion at Louis Vuitton in Paris
    The 10 best bedspreads

    The 10 best bedspreads

    Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
    Arsenal vs Galatasaray: Five things we learnt from the Emirates

    Arsenal vs Galatasaray

    Five things we learnt from the Gunners' Champions League victory at the Emirates
    Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

    Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

    This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
    Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

    The children orphaned by Ebola...

    ... then rejected by surviving relatives over fear of infection
    Pride: Are censors pandering to homophobia?

    Are censors pandering to homophobia?

    US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence