ISAs: what are they, and which one is for me

Since being launched back in 1999 Individual Saving Accounts (ISAs) have been very popular for those wanting to put money into savings. There are four types of ISA, and the majority allow flexible saving and the ability to withdraw funds easily. There are financial penalties on certain products, these usually pay the most interest.

Four types of ISA

  • Cash ISA
  • Stocks and shares ISA
  • Innovative finance ISA
  • Lifetime ISA

You can choose to save up to the personal allowance across a number of accounts or products (excluding the Lifetime ISA).

Criteria to open an ISA

In the UK you must be a UK resident (or if not meet other specified criteria). You must be 18 years old, unless you are opening a Junior ISA (under 18 and a British citizen). If you are opening a Lifetime ISA you must be under 40 years old.

Lifetime ISA

The Lifetime ISA is specifically to either help savers purchase their first home, or to save for later life (pension). You need to be over 18 and under 40 years old to open an account and you can put in up to £4,000 each year until you are 50. The government will add a 25% bonus up to a maximum of £1,000 each year.

Not for everyone

Depending on the product you go for, you may end up locking your money for some time and aren’t able to withdraw it without penalty. ISAs are aimed at people who pay tax on the interest their savings make. If you don’t pay tax on interest (total ISA allowance is £20,000 per financial year), you may find you earn more interest on a standard savings account.

Recent posts

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The chancellor has advised that landlords could have another tax to pay this autumn as the Treasury decide whether to extend national insurance contributions to rental income. 

According to a report in the Guardian, senior ministers have asked Treasury officials to look into a “proportional” property tax to see how it would work as an alternative to the existing stamp duty land tax on owner-occupied homes. 

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The new Delayed Start Mortgage launched by Skipton Building Society allows first time buyers to postpone the first three mortgage payments. This product has been designed to help soften the blow of moving in costs for first time buyers. 

Mortgage lenders are starting to recognise their “Green” responsibilities when it comes to the different products they offer. 

A recent study by Boon Brokers where 1,000 people who had used an estate agent over the last year were surveyed, showed that a whopping 52% said they were pressured into using the estate agents’ in-house mortgage broker.