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

PROMOTED VIDEO
Life and Style
A still from a scene cut from The Interview showing North Korean leader Kim Jong-un's death.
tech
Voices
'That's the legal bit done. Now on to the ceremony!'
voicesThe fight for marriage equality isn't over yet, says Siobhan Fenton
Life and Style
Approaching sale shopping in a smart way means that you’ll get the most out of your money
life + styleSales shopping tips and tricks from the experts
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

    SThree: Trainee Recruitment Consultant - LONDON

    £20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    SThree: Graduate Recruitment Consultant

    £20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £35K - £45K: SThree: SThree Group have been we...

    Day In a Page

    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all
    The week Hollywood got scared and had to grow up a bit

    The week Hollywood got scared and had to grow up a bit

    Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

    Panto dames: before and after

    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
    Thirties murder mystery novel is surprise runaway Christmas hit

    Thirties murder mystery novel is surprise runaway Christmas hit

    Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
    Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

    Anne-Marie Huby: 'Charities deserve the best'

    Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
    The botanist who hunts for giant trees at Kew Gardens

    The man who hunts giants

    A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
    The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

    The 12 ways of Christmas

    We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
    Birdwatching men have a lot in common with their feathered friends, new study shows

    The male exhibits strange behaviour

    A new study shows that birdwatching men have a lot in common with their feathered friends...
    Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

    Famous diaries: Christmas week in history

    Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
    From noble to narky, the fall of the open letter

    From noble to narky, the fall of the open letter

    The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
    A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

    A Christmas ghost story by Alison Moore

    The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'