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8th
Jan 2021
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What types of ISA are there?

What types of ISA are there?

ISAs are a first port of call for UK savers however there are different types. We explore the different ISAs available.

What types of ISA are there?

Individual Savings Accounts (ISAs) are the principal method of tax-efficient savings in the UK, and there are several different types to choose from.

Cash ISAs

These are essentially deposit accounts, and they have declined in popularity in recent years. Interest rates are at all-time lows and basic rate taxpayers are now able to earn up to £1,000 interest per year free of tax without using an ISA in any case.

Cash ISAs in one sense provide a risk-free method of saving, in that the account balance is guaranteed not to fall. However, given today’s ultra-low interest rates, there is still the risk that any gains will be lower than inflation, resulting in a loss in real terms.

Stocks & Shares ISA

There is a huge range of different investment options here.

Your stocks & shares ISA monies can be invested in areas such as:

  • Government and corporate bonds
  • Directly into company shares
  • Unit trusts
  • Investment trusts
  • Open ended investment companies

It’s also possible to focus your investment according to your personal wishes, so you might seek out investment funds that focus on companies in a particular geographical area, or a particular business sector.

Other people simply opt for investments that track well-known stock market indices, or they choose ‘ready-made portfolios’, where they let the experts pick the investments on their behalf.

All stock market-based investments carry a degree of risk, so the value of your investment can fall as well as rise. However, some stocks & shares options are riskier than others, and a skilled financial adviser can help you identify how much risk you can afford to take.

fundsupermarket is a good way to invest in a stocks and shares ISA providing an extensive range of options.

Innovative Finance ISA

This ISA allows you to invest in the peer-to-peer lending market. Your contributions will be lent directly to individual borrowers and businesses and the borrowers then pay back the borrowed amount, with added interest.

Despite the addition of interest in this way, don’t be tempted to see innovative finance ISAs as being like cash ISAs, only with better returns.

There is the risk that the borrowers could default on their repayments. Unlike other forms of ISA, these investments are not protected by the Financial Services Compensation Scheme should your provider cease trading.

Providers should only promote these ISAs to high net worth or sophisticated investors, given their complexity.

Lifetime ISA

Lifetime ISAs can be opened by those aged between 18 and 39, and contributions can continue until a person’s 50th birthday. It is designed to be used to save for the purchase of a first home, or for retirement purposes. 

Contributions can be invested in cash, stocks & shares or a combination of the two. You can access the account when you are ready to purchase a home, or when you reach age 60.

Help To Buy ISA

This is a type of cash ISA to assist first-time buyers saving towards the costs of buying a home. It is no longer possible to open a new account, but contributions can still be made to existing accounts.

Junior ISA

Junior ISAs can be opened in the name of any person under the age of 18. 

The account must be opened by their parent or legal guardian, after which anyone can make contributions to the account on behalf of the child. Contributions can be invested in cash, stocks & shares or a combination of the two. 

The current junior ISA allowance is £9,000 per child.

Investment Fund Supermarket ISAs

Stocks & Shares ISA

from Fidelity

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: Select from over 4,000 funds. Large selection of UK shares. Investment trusts, ETFs and investment portfolios put together by experts.
  • Invest From: £25 per month or lump sum from £1,000

Why we like it: Investment choice from over 100 fund providers, giving you access to 4,000+ funds. Great service – from investment guidance on website through to UK-based phones team. PathFinder, Select 50, Investment Finder - investing tools for beginners to advanced investors. 24/7 access via online Account Management system.

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.

Stocks & Shares ISA

from Interactive Investor

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: Access 40,000+ UK, US and international shares on 17 global exchanges. Choose from over 3,000 funds or select a ready made portfolio. Investment trusts, ETFs, Bonds & Gilts. Option to invest in 6 low cost funds selected by experts to get you started.
  • Invest From: £25 a month or any lump sum

Why we like it: An award-winning ISA that gives you complete control. The second largest platform in the UK with the widest choice of investment options in the market including funds, investment trusts, ETF’s and more. Strong ethical investment proposition with more than 140 investment options. Open online in less than 10 minutes. Access to expert independent ideas and analysis. Low cost fees and trading.

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.

Model Portfolio ISA

from Moneyfarm

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: Choose your risk profile and have it matched to an investment portfolio expertly built and managed using exchange traded funds (ETFs)
  • Invest From: £1,500

Why we like it: Answer questions about your goals, financial situation and attitude to risk, and Moneyfarm will recommend the right ISA portfolio for you, built and managed by experts to help your money grow. You’ll always be invested in a portfolio that’s suitable for you, and you can manage this through the Advice Centre. See what you’re invested in, how you’re performing and how much you’re paying anywhere and any time with the Moneyfarm app. Add money to your ISA by setting up a direct debit, investing a lump-sum, or by transferring old ISAs for free

Model Portfolio ISA

from AJ Bell

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: Choose the fund that suits you. There are eight in total, each built by our specialist team at AJ Bell Investments.
  • Invest From: £25 pm

Why we like it: The ‘no-hassle’ option – just choose your fund and how much to invest. That’s it. They do everything else from there, including managing and rebalancing the fund whenever they think it’s necessary.

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.

Lifetime ISAs

Lifetime ISA

from Hargreaves Lansdown

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Over 2,500 Funds, Investment Trusts, Bonds, ETF's or Cash
  • Invest From: £100 single or £25 per month

Why we like it: Easy set up in a matter of minutes. Start with as little as £25 and save up to £4,000 per year. Wide choice of stock market linked investments, or can be retained in cash. Fund factsheets and investment tools available. Simple annual management fee of 0.45%. There may be some other charges depending on the investment choices. Hargreaves Lansdown are regulated by the Financial Conduct Authority and are covered by the Financial Services Compensation Scheme. Capital at risk.

  • Open in five minutes
  • 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 invest 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
  • 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
  • If you need to access your money for any other reason, you’ll pay a 25% penalty
  • Annual account charge of 0.45%
  • Dealing and other charges will depend on the investments you choose and will apply in addition to our 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 allowance
Junior ISAs

Junior Ethical ISA

from Legal & General

Regular Savings
  • Investment Options: Invest from £20 pm or from £100 lump sum. The L&G stocks and shares Junior ISA is a great way to help you save for a child or grandchild, up to the annual allowance of £9,000 for the 2020/21 tax year.

Why we like it: L&G offer a "Future World" range allowing you to invest in funds that don’t just track the market – they seek to make positive change. e.g. The Future Word sustainable Opportunities Fund invests in a wide range of company shares, bonds, property and real assets (including property, land and infrastructure) which meet's L&Gs long term sustainable investment criteria, based on environmental, social and governance factors, while the Future World Climate Change identifies companies that are critical to the shift to a low-carbon economy and are paying special attention to their actions.

Important: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

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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