What are the different types of ISAs?
Cash ISA
A cash ISA allows you to save money without paying any tax on the interest earned. Similar to a savings account, there are also many different types of cash ISAs, from fixed-rate to easy access.
Stocks and shares ISAs
A stocks and shares ISA is a tax-efficient way to invest. This is different to a cash ISA as it doesn’t hold savings in cash, instead it allows you to invest in a range of assets, including stocks and bonds. It’s important to remember that with investing, your capital is at risk and you might get back less than you put in.
Innovative finance ISA
An innovative finance ISA enables you to earn tax-free interest on peer-to-peer (P2P) lending platforms instead of cash or stocks. Peer-to-peer lending is when investors are paired with individuals or businesses, but there are risks involved as returns are never guaranteed. Plus, the money is not protected by the Financial Services Compensation Scheme if the platforms go bust.
Lifetime ISAs
A lifetime ISA is a type of savings account that helps people to save for their first home or retirement. The lifetime ISA limit is £4,000 and is part of the £20,000 ISA allowance. If a saver puts the maximum amount into a lifetime ISA each year, the government adds a 25% bonus which could be up to £1,000 every year. However, there are certain rules with this ISA, so read all the terms and conditions before saving.
What are the different types of ISAs?
Cash ISA
A cash ISA allows you to save money without paying any tax on the interest earned. Similar to a savings account, there are also many different types of cash ISAs, from fixed-rate to easy access.
Stocks and shares ISAs
A stocks and shares ISA is a tax-efficient way to invest. This is different to a cash ISA as it doesn’t hold savings in cash, instead it allows you to invest in a range of assets, including stocks and bonds. It’s important to remember that with investing, your capital is at risk and you might get back less than you put in.
Innovative finance ISA
An innovative finance ISA enables you to earn tax-free interest on peer-to-peer (P2P) lending platforms instead of cash or stocks. Peer-to-peer lending is when investors are paired with individuals or businesses, but there are risks involved as returns are never guaranteed. Plus, the money is not protected by the Financial Services Compensation Scheme if the platforms go bust.
Lifetime ISAs
A lifetime ISA is a type of savings account that helps people to save for their first home or retirement. The lifetime ISA limit is £4,000 and is part of the £20,000 ISA allowance. If a saver puts the maximum amount into a lifetime ISA each year, the government adds a 25% bonus which could be up to £1,000 every year. However, there are certain rules with this ISA, so read all the terms and conditions before saving.
