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19th
Oct 2020
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What do I need to know about ISAs?

What do I need to know about ISAs?

ISAs are a popular way for Brits to get good tax-efficient returns on their pennies, but it’s important to know what the ups and downs are of any financial investment. So we did some research to find the most common questions you have about ISAs, and have answered them for you here. 

As the name would suggest, at ISA.co.uk we are all about ISAs; and if our research is anything to go by, the general public has a lot of questions regarding ISAs. Luckily, we're here to help - we've looked at all your questions, and got you the answers you need. 

Can ISAs lose money?

This is one of the big ones: the question of how risky are ISAs really.

The answer is that some ISAs can theoretically lose money – for example, an Investment ISA can lose money if your investments perform badly. Investing in the stock market (in any medium, not just ISAs) runs the risk of that investment performing poorly, and therefore you could get less money out than you put in – ego, losing some money.

Cash ISAs could theoretically lose some money as the current rate of interest on Cash ISAs is at a historical low. If you hold your money in an account long enough, inflation could theoretically rise faster than the rate of interest. This would make the money in your account ‘worth less’ than when you originally put it in.

Why are ISAs so good?

One of the biggest questions on the minds of those thinking of opening an ISA is this: why are they so good?

ISAs are an excellent, tax efficient way to make sure your money is gaining returns or interest without being subject to capital gains or income tax.

Every UK resident is entitled to put up to £20,000 into ISA accounts every tax year; this money can gain returns or interest without tax, which means you can maximise the amount of money you can get back from your investment or savings.

 Are ISAs protected?

The way in which your ISA is protected differs depending on the type of ISA you have.

Your Investment ISAs will not be protected by the fluctuations in the stock market.

Some ISAs are protected by certain schemes – most ISAs, including Stocks and Shares ISAs are protected by the Financial Conduct Authority (FCA) which is an independent regulatory body. They regulate the conduct for most of the UK's financial bodies.

There are protections in certain situations – for example, in the extremely unfortunate event that your fund manager of an Investment ISA goes bust then you are protected by certain schemes. If your fund manager runs into issues and is unable to repay your money, then you could be compensated by the Financial Services Compensation Scheme (FSCS) for amounts up to £85,000 - per person, per institution. This is the UK's statutory compensation scheme.

This will protect the investments of the vast majority of people - but if you have a considerably large amount of investments (i.e. greater than £85,000) you should ensure your investments are spread across multiple different platforms to efficiently protect your money.

What kind of ISAs are there?

There are a wide variety of different kinds of ISAs, including:

Read more about ISAs here

Fixed Rate Cash ISAs

2 Year Fixed Rate Cash ISA

from Aldermore

Interest Rate (AER) 0.70%
  • Term: 2 Year

'Winner' – ISA Provider of the Year for the 5th year running Consumer Moneyfacts Awards 2011-15

1 Year Fixed Rate Cash ISA

from Aldermore

Interest Rate (AER) 0.60%
  • Term: 1 Year

Open a 1 Year Fixed Rate Cash ISA with Aldermore Bank to get a great return. 

Selected ISAs

FTSE 100 Tracker Fund

from Legal & General

ISA Option
Allows ISA Transfers
Regular Savings
  • Fund Choice: Tracks FTSE 100 Index
  • Invest From: £20 pm
  • Investment Options: Provides exposure to the FTSE 100 index of the largest companies listed on the London Stock Exchange at a highly competitive price.

A low cost way of looking for capital growth by tracking the 100 most capitalised mature companies listed on the London Stock Exchange. You can invest up to £20,000 this tax year, with a low minimum of £100 lump sum or £20 per month, and you can manage your account easily online. 

Important: The value of investments can go down as well as up so you may get back less than you invested. 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.

FTSE 100 UCITS ETF Tracker Fund

from iShares

ISA Option
Allows ISA Transfers
Regular Savings
  • Fund Choice: Tracks FTSE 100 Index
  • Invest From: £50 pm
  • Investment Options: Provides exposure to the FTSE 100 index of the largest companies listed on the London Stock Exchange at a highly competitive price.

A super low cost FTSE 100 tracker ETF fund with a 0.07% pa annual charge. 

The product has a record of tracking its benchmark to a high degree of accuracy and scored ahead of rivals on this measure. Income generated is reinvested.

The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being the FTSE 100 Index), less the fees and expenses of the Fund. In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity securities that as far as possible and practicable consists of the component securities of the FTSE 100 Index, this Fund’s Benchmark Index. 

Available via:

Fidelity investment platform »

Special offer:

Invest and get £25 cashback »

Build your savings with an ISA, SIPP or Investment Account and receive £25. Exclusions, T&Cs apply.

Important: The value of investments can go down as well as up so you may get back less than you invested. 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.

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

Our Top Picks for Technology Stocks and Shares ISAs

19th January 2021

The tech industry has been booming for the past fifteen years; and it seems to be a rollercoaster that only goes up. The tech bubble has yet to burst, with companies coming out with more and more technological developments and consumer demand is certainly not slowing down. So, for the tech-savvy investor who wants to put their pennies behind this strong growing industry, we’ve put together our top three picks for Technology Stocks and Shares ISAs. 

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ISA.co.uk is a trading style of Fair Investment Company.

We've been comparing and recommending ISAs for many years so you can trust you're in good hands.

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Jen

I found the way the different options are presented very clear - much more useful than some other comparison sites. I sent it to my daughter as well.

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Very informative, find myself a good ISA account with best return in terms of interest.

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Rob Holden

The website was very useful and informative.

Andrew Johnson

ISA can be confusing at first and this site includes a useful and helpful introduction into the world of ISAs