The best source of guidance on ISA (Individual Savings Accounts) is your Anstee & Co financial adviser. Their advice is independent and unbiased, but here are the key details.
Different types if ISA
There are currently five types of ISA:
- Cash ISAs can include savings in bank and building society accounts and some NS&I (National Savings and Investments) products.
- Help to Buy ISA is designed for people saving to buy a first home. Depending on how much you save, it could provide a maximum bonus of £3,000.
- A Junior ISA is a tax-efficient children’s savings account into which you can make contributions on your child’s behalf, subject to an annual allowance. Junior ISA’s replaced the Child Trust Fund (CTF), but there is no government payment into Junior ISAs.
- Stocks and Share ISAs can include unit trusts, investment trusts, shares in companies and corporate bonds. However, non-ISA shares that you already own cannot be transferred to an ISA.
- Innovative Finance ISAs are a recent arrival. Innovative financial ISAs can include peer-to-peer loans (loans that you provide to other people or businesses without using a bank). Pre-existing peer-to-peer loans cannot be transferred to an ISA.
How the ISA’s tax-free wrapper works
An ISA is a tax-free wrapper which can be put around a host of investment products that themselves are not tax free. For example, there are thousands of collective funds (unit trusts, OEICs, corporate bonds and investment trusts) that can sit within your ISA and provide tax-free returns. However, you could invest in precisely the same funds outside of an ISA and might be subject to tax on any dividends or capital gains. Certain investment returns may be received by the ISA Manager with tax credits or after-tax deductions which cannot be reclaimed.
The benefits of collective investments within an ISA
Collective investments pool your money with that of other investors to give you a stake in a ready-made portfolio, allowing investments in lots of different asset classes. The two most popular types of investments funds are unit trust and open-ended investment companies (OEICs).
For more information about ISA’s and how they may be right for you, contact Anstee & Co and book your free initial meeting one of our financial advisers. As we are independent our advice is unbiased.