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23rd
Nov 2020
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How to Choose the Right ISA for You

How to Choose the Right ISA for You

You have a £20,000 yearly allowance that you can put into the ISA tax-free wrapper. You can spread this over different types of ISAs or you can focus your money into one type of ISA. Choosing the right type of ISA is important to make sure you make the most of your allowance: but, how do you choose the right one that works for you? 

The right ISA for you will depend on what you want your money to do: there are a lot of options to serve various needs. You can read about all the different kinds of ISAs in a more in-depth way on our website. 

The Right ISA For...

Access to Cash

If you want to put your pennies into an ISA but want to retain access to those funds, then you’ll want to open an Instant Access Cash ISA.

This money will gain interest in a tax-free wrapper, keeping it safe from income tax and capital gains tax.

While Instant Access Cash ISAs currently have historically low interest rates, they are still a good option if you’re new to ISAs and don’t know where to put your money, and want to make sure you maintain access to your money. 

Long-Term Savings

There are some great ISA options when it comes to long term savings, with some potential for excellent returns which are kept safe from capital gains tax and income tax. The two that we want to highlight here are:

Investment ISAs are basically what it says on the tin: they are ISA wrappers within which you can put your money to work in investments. The returns from these investments are tax free. Investment ISAs should be longer term ways of saving because you should try and hold investments for at least five years – to allow for the normal fluctuations in the stock market.

There are a wide variety of different kind of Investment ISAs to choose from, which may or may not be for you depending on what kind of investor you are. These include:

Lifetime ISAs are a specific type of ISA which was intentionally created for long term savings. You can put up to £4000 into a LISA for this tax year and for this the government will put in a 25% bonus to any cash you put in. So, you have the potential to gain £1000 free cash, which is an excellent return rate.

The catch with Lifetime ISAs is that you can only access the cash once you turn 55 or in order to fund a deposit on your first home. This makes them an excellent long-term saving option, with a fantastic return rate that you’ll find tough to beat.

Buying Your First House

For buying a first home, a Lifetime ISA is the best way forward. The previous Help-to-Buy ISA scheme are still valid if you opened one before the end of the scheme (November 30th, 2019), but if you’re looking to open an ISA now with the view towards saving for a new home then you’re going to want to open an LISA.

A LISA has a limit of £4000 that you can put into the account every tax year, and the government will then put in a 25% bonus to however much you have put in – giving you the potential to gain an impressive £1000, which can go a long way to boosting your deposit savings.

You’ll be hard-pressed to find a 25% bonus return in any other account.

Under-18s

Junior ISAs are the only option for having an ISA under the age of 18.

One of the requirements for opening an ISA in the UK is that you have to be over the age of 18 – but, as an adult, if you are the guardian or parent of a child, you can open a JISA for them. This is an account which you can put money into which will gain tax-free returns which the child in question can then access once they reach the age of 18.

This current tax year’s allowance for a JISA is a generous £9000 – that’s a very high allowance for you to put money away for your under-18s to set them up for some financial security at the start of their adult life.

Diversifying your Investments

If you’re an investor, you’ll likely already have Investment ISAs – they’re a great way to invest in a tax-efficient manner.

But, if you’re looking to diversify the kind of investments you have (and you have plenty of investing experience) then you might want to think about a Peer to Peer ISA.

These allow savers can lend money directly to borrowers, getting rid of the middle man and potentially benefiting from a better interest return on their investment.

Many of them offer higher, attractive returns – but they do come with a higher level of associated risk, so it’s important to make sure you’re comfortable investing before you go down this route. 

Read more about your ISA options.

Investment Fund Supermarket ISAs

Stocks & Shares ISA

from Fidelity

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Choose from over 4,000 investment options, including one of the widest fund ranges in the UK, plus shares, investment trusts and exchange-traded funds. There’s also expert guidance to help with your investment decisions, which includes a selection of tools and insights from Fidelity’s experts. Capital at risk. Tax and ISA rules apply.
  • Invest From: £25 through regular savings or £1,000 lump sum

Why we like it: Fidelity has lots of investment options, plus an extensive range of guidance tools to help you decide what to invest in. Their award-winning ISA is easy to start and offers great value, their a typical service fee of just 0.35%. Other ongoing charges apply. On top of that, everything is backed by Fidelity’s 50 years of investment experience.

Important: The value of investments can go down as well as up so you may get back less than you invest. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

Tax treatment depends on individual circumstances and all tax rules may change in the future.

Selected ISAs

Stocks & Shares ISA

from Nutmeg

ISA Option
Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: Nutmeg offer 4 diversified portfolios with exchange traded funds (ETFs), using technology to keep charges low and clearly show where you’re invested.
  • Invest From: Min. £500 single

Why we like it: Get an intelligent stocks & shares ISA portfolio - Choose from one of 4 portfolio options. No tie-ins, no set-up fees, no exit charges. Easy, online set up in minutes. Start with as little as £500. Portfolio management fees of 0.45%-0.75% up to £100k. 0.25%-0.35% beyond £100k. There are also underlying investment charges, see Nutmeg's fee page. Plus, live chat, amazing customer support and brilliant investor tools and guides. Authorised and regulated by the FCA. Capital at risk. ISA rules apply.

Investment Fund Supermarket ISAs

Stocks & Shares ISA

from Hargreaves Lansdown

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Choose from over 2,500 funds, shares, investment trusts and more to build your portfolio. UK and overseas shares. Corporate and government bonds. Exchange Traded Funds (ETFs). Ready-made portfolios to suit your goals and attitude to risk from £1,000. Expert research to help make your decisions. Investment trusts and much more. Capital at risk.Tax & ISA rules apply
  • Invest From: £25 pm or from £100 lump sum

Why we like it: Choose your own funds or alternatively a ready made portfolio. Market-beating savings and discounts of up to 5.5%. No charge to buy and sell funds. Low, tiered annual charges for holding funds, with a maximum of just 0.45% per annum. Free fund updates and analysis from experienced research team. Invest with a financially secure, FTSE 100 company.

Important: The value of your investments can rise as well as fall. You may get back less than you invested. If you’re unsure, we recommend you ask for independent advice.

Junior ISAs

Junior Stocks and Shares ISA

from Hargreaves Lansdown

Regular Savings
  • Investment Options: Invest from £25 per month or deposits of £100.

Why we like it: Invest for your child from £25 pm tax free. A wide range of top performing funds to choose from. The annual charge for holding investments in a Hargreaves Lansdown Junior ISA is never more than 0.45%. Your dealing and other charges will depend on the investments you choose.

Important: The value of your investments can rise as well as fall. You may get back less than you invested. If you’re unsure, we recommend you ask for independent advice.

Important Risk Information:

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice.

High Income ISAs

High income ISA ideas:

ISAs Products

Cash ISAs

Fixed Rate & Instant Access ISAs:

Cash ISAs: 

Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

Latest News

5 Considerations for Your Next Investment ISA

15th March 2021

You've decided to invest your savings into a Stocks and Shares ISA. You'll be using your tax-free ISA allowance for this year before the deadline, while also investing your money for your future. But what do you need to consider before opening an account? We've put together a list of our top five considerations for you to think about before you click "apply". 

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