Isa Rate Calculator

by

ISA Growth & Returns Calculator

Projected ISA Value

Total Balance:

£0.00

Total Interest Earned:

£0.00

function calculateISA() { var initial = parseFloat(document.getElementById('initialDeposit').value); var monthly = parseFloat(document.getElementById('monthlySave').value); var rate = parseFloat(document.getElementById('isaRate').value) / 100; var years = parseInt(document.getElementById('years').value); if (isNaN(initial) || isNaN(monthly) || isNaN(rate) || isNaN(years)) { alert("Please enter valid numbers in all fields."); return; } var months = years * 12; var monthlyRate = rate / 12; // Formula for future value of initial deposit: P(1+r/n)^(nt) var futureValueInitial = initial * Math.pow(1 + monthlyRate, months); // Formula for future value of monthly contributions: PMT * [((1 + r/n)^(nt) – 1) / (monthlyRate)] var futureValueContributions = 0; if (monthlyRate > 0) { futureValueContributions = monthly * ((Math.pow(1 + monthlyRate, months) – 1) / monthlyRate); } else { futureValueContributions = monthly * months; } var totalBalance = futureValueInitial + futureValueContributions; var totalInvested = initial + (monthly * months); var totalInterest = totalBalance – totalInvested; document.getElementById('totalBalance').innerText = '£' + totalBalance.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('totalInterest').innerText = '£' + totalInterest.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('contributionText').innerText = "Total amount paid in: £" + totalInvested.toLocaleString(); document.getElementById('isaResult').style.display = 'block'; }

Understanding ISA Rates and Tax-Free Savings

An Individual Savings Account (ISA) is a powerful tool for UK residents to save or invest money without paying Income Tax or Capital Gains Tax on the returns. Our ISA Rate Calculator helps you project the future value of your savings by factoring in initial deposits, recurring contributions, and the power of compound interest.

How the ISA Calculation Works

This calculator utilizes a monthly compounding formula to simulate how your money grows over time. Most Cash ISAs calculate interest daily and pay it monthly or annually. By selecting an Annual Equivalent Rate (AER), you can compare different products across the market effectively.

Example Calculation:
If you start with £5,000, add £250 per month, and achieve an AER of 5%, after 5 years your ISA would be worth approximately £23,439. This includes £3,439 in tax-free interest.

Current ISA Types and Limits

For the 2024/2025 tax year, the annual ISA allowance remains at £20,000. You can split this across different types of ISAs:

  • Cash ISA: Similar to a standard savings account but tax-free.
  • Stocks & Shares ISA: Investing in the stock market where growth and dividends are tax-exempt.
  • Lifetime ISA (LISA): For those aged 18–39, used for a first home or retirement, with a 25% government bonus.
  • Innovative Finance ISA: Peer-to-peer lending investments.

Maximizing Your ISA Returns

Strategy Benefit
Start Early Compounding has more time to grow your wealth.
Monthly Top-ups Consistency helps in smoothing out market volatility (for S&S ISAs).
Shop for AER Even a 0.5% difference in rates can result in thousands over 20 years.

Frequently Asked Questions

What is AER?
AER stands for Annual Equivalent Rate. It illustrates what the interest rate would be if interest was paid and compounded each year, making it easier to compare different savings accounts.

Can I lose money in an ISA?
In a Cash ISA, your capital is generally protected up to £85,000 via FSCS. In a Stocks & Shares ISA, the value of your investments can go down as well as up, and you may get back less than you invested.

Is the ISA allowance per person?
Yes, the £20,000 limit is per individual. A married couple can effectively shield £40,000 of their savings from tax every year.

Leave a Comment