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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

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

Core FTSE 100 ETF Tracker Fund

from iShares

ISA Option
Allows ISA Transfers
Regular Savings
  • Fund Choice: Tracks the FTSE 100 Index
  • Invest From: £25 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.

This fund is available via: Interactive Investor platform »

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.

Lifetime ISAs

Lifetime ISA

from AJ Bell

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Over 2,000 Funds, Shares and ETF's
  • Invest From: £25 per month
  • Trade From (frequent trader rate): £4.95
  • Trade From (standard trader rate): £9.95

Why we like it: Start from £25 per month and save up to £4,000 per year. Wide choice of stock market linked investments, or utilise online investment ideas. Can be retained in cash. Simple annual management fee of 0.25%. Deal from £1.50 and never pay more than £9.95 per online deal. AJ Bell are regulated by the Financial Conduct Authority and are covered by the Financial Services Compensation Scheme. Capital at risk. AJ Bell Youinvest doesn’t offer advice.

  • Select your own investments, access fund options, or choose investment ideas where specialists do the hard work for you
  • Access your account online 24/7 and deal on the go with the mobile app
  • UK-based customer services team, webchat and email support
  • Open with lump sum, regular contributions or transfers from existing ISA's
  • Contribute up to £4,000 per year until you’re 50
  • Get a 25% government bonus: For every £4 you pay in you receive a £1 bonus
  • Use your savings to buy your first home up to a value of £450,000, or use as retirement income from aged 60
  • You can contribute to both a stocks and shares Lifetime ISA and a ‘regular’ stocks and shares ISA in the same tax year
  • Must be UK resident aged 18-39 to open
  • If you need to access your money for any other reason, you’ll pay a 20% penalty (25% from 6 April 2021)
  • Annual account charge of 0.25%
  • Dealing and other charges will depend on the investments you choose and will apply in addition to an annual account charge
  • Tax rules can change and their benefits depend on your circumstances. Lifetime ISA allowance forms part of the overall £20,000 annual ISA allowance
  • Tax and Lifetime ISA rules apply
  • If you choose to save in a LISA instead of enrolling in, or contributing to, your workplace pension you will miss out on the benefit of your employer’s contributions to that scheme and your current and future entitlement to means tested benefits may be affected
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.

Junior Stocks & Shares ISA

from Nutmeg

  • Investment Options: Invest in one of four expertly designed portfolios depending on your investment style

Why we like it: Open with a lump sum from £100 to £9,000 in the 2021/22 tax year. After initial investment top up any time with no minimum. Simple, transparent - Invest in one of a range of four expertly designed portfolios depending on your investment style. All four Nutmeg investment styles are built by experts and use exchange traded funds to diversify across stocks, bonds, industries, even countries. Choose the one that works for you. No exit fees and you’re free to make adjustments. You can see where your Junior ISA is invested and how it’s performing. Withdrawals possible from age 18. You can also transfer an existing Junior ISA or Child Trust Fund. If you need any help, financial advisers and customer support will answer any questions you have

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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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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