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ISAs Explained

How to get started with ISAs
ISAs are an excellent way to put money aside for the future while enjoying the advantage of tax-free interest. By familiarising yourself with the ins and outs of these tax-efficient savings and investment options, you can enjoy the full range of benefits available.
Peer to Peer Lending ISAs

Premium Innovative Finance ISA (IFISA)

from easyMoney

ISA Option
Allows ISA Transfers
Interest Rate 4.05% annualised target return
  • Term: No Fixed Term
  • Invest From: £1000

Why we like it: Invest up to £20,000 this tax year and/or transfer in from an existing Cash ISA, Stocks & Shares ISA or IFISA. When you join the easyMoney family you will automatically become an easyMoney plus card member, offering savings up to 55% at over 100 of Britain’s biggest retailers and more! e-Money Capital Ltd trading as easyMoney is authorised and regulated by the FCA (FRN 231680). As with all investing, your capital is at risk when you lend to businesses and returns are not guaranteed. No FSCS. For more details please refer to our full risk statement.

  • 4.05% TAX-FREE through the Conservative Innovative Finance ISA
  • Minimum investment of £1,000
  • Secured by UK property
  • Maximum 65% loan to value
  • Significant buffer of 35% should the value of a property fall
  • you will automatically become an easyMoney plus card member, offering savings up to 55% at over 100 of Britain’s biggest retailers and more!
  • Also accepts ISA transfers from previous year's ISA's
  • As with all investing your capital is at risk when you lend to businesses. easyMoney reduces this risk by taking security over property
  • Returns are not guaranteed and your actual returns may vary
  • Capital is at risk
  • Must be aged 18 or older
  • Peer to peer lending is not covered by the FSCS

Calculate your interest with this plan

Your savings:
£
You could gain:
£0.00 (per tax year)
Share Dealing ISAs

Youinvest ISA

from AJ Bell

  • Trade From (frequent trader rate): £4.95
  • Trade From (standard trader rate): £9.95

Why we like it: Voted ‘Best ISA Provider 2017’ in the City of London Wealth Management Awards. Place 10 deals or more per month and pay only £4.95 per online deal in the next month. Deal from £1.50 and never pay more than £9.95 per online trade. Capital at risk

Investment Income Plan ISAs

FTSE 100 Defensive Income Plan

from Investec

Allow ISA Transfers
Annual Income up to 6.70%
  • Counterparty: Investec Bank
  • Term: Maximum 8 years

If you’re looking for high income, then the ability to receive 6.70% per year even if the FTSE falls almost 20%, could be appealing.

  • Up to 6.70% per year based on the performance of the FTSE 100 Index
  • Income paid even if Index falls by 20%
  • Quarterly payments
  • Alternative option also available paying up to 5.10% pa if the FTSE doesn't drop by 40% or more
  • Capital is at risk if the FTSE 100 Index has fallen by more than 40% at maturity from it's initial level, in which case your initial investment will reduce by 1% for each 1% fall
  • Minimum investment £3,000
  • An arrangement fee applies for this plan
  • Product designed to be held for the full term

Calculate your interest with this plan

Your savings:
£
You could gain:
£0.00 (per tax year)

Important Information: Structured investment plans are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment due to the performance of the underlying investment. There is also a risk that the company backing the plan known as the Counterparty may be unable to repay your initial investment and any returns stated.

Investment Growth Plan ISAs

FTSE 100 Enhanced Kick Out Plan

from Investec

Allow ISA Transfers
Maximum Potential Return 9.60% per annum
  • Counterparty: Investec Bank plc
  • Term: Up to 6 years

Kick out plans seem to attract particular interest when the market is at historically high levels since they can provide competitive returns even if the FTSE stays relatively flat with the potential for 9.60% annual growth.

  • 9.60% for each year (not compounded) provided the FTSE 100 finishes higher than its starting value (subject to averaging)
  • Potential to mature early, from year 1 onwards
  • Available for ISA, ISA transfer and direct investment
  • Capital is at risk if the FTSE 100 Index has fallen by more than 40% at maturity from it's initial level, in which case your initial investment will reduce by 1% for each 1% fall
  • Minimum investment £3,000
  • Product designed to be held for the full term

Important Information: Structured investment plans are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment due to the performance of the underlying investment. There is also a risk that the company backing the plan known as the Counterparty may be unable to repay your initial investment and any returns stated.

ISAs Explained

Individual Savings Accounts (ISAs) are a way of saving and investing without paying any tax on the returns you make. ISAs were launched in the UK in 1999 to encourage people to save.

They allow you to earn interest on your savings without paying tax on it, and to invest in stocks and shares without being liable for tax on any returns you make.

ISAs were introduced to replace Personal Equity Plans (PEPs). Initially savers had the option of a mini ISA, which allowed investments in either cash or stocks and shares, or a maxi ISA, which combined both elements in one account.

The two current types of ISA , cash ISAs and stocks and shares ISAs, which replaced the mini and maxi ISAs in 2008. There are also innovative finance ISAs which involves lending to small business and the lifetime ISA which will be released in 2017. The lifetime ISA can help you save for a new home or your retirement and offers government bonuses to help you reach your goal.

What are the Benefits of an ISA?

For UK residents, ISAs are an excellent way of saving - in fact, they should be your first savings port of call in order to avoid paying tax unnecessarily on your investments.

  1. The primary benefit of ISAs is the tax advantage that allows individuals to profit from savings or shares without paying income or capital gains tax on that return
  2. The secondary benefit is that you are saving some of your income

Whether you've a particular savings goal in mind or you just want to ensure you've got an emergency fund tucked away, an ISA can provide a simple way to help achieve this.

There are many ISA’s to choose from so it’s easy to be left wondering which ISA is right for you. Comparison tables can be a great way to start. Follow the links provided to find more information on any of the products mentioned on our tables.

How do I Choose an ISA?

When choosing an ISA, there are a number of things to consider. We’ve highlighted some of the most important factors below:

  1. Timescale of your investment - If you need access to your money and you are not looking to invest for the long term you should consider a Cash ISA. Many of these are easy to manage and allow you to withdraw money at any point. However, if you are happy to tie up capital for the medium to longer term you may wish to consider a Stocks and Shares ISA which has the potential to provide better returns then a Cash ISA over the longer term
  2. Attitude to investment risk - If you are not prepared to lose money then a Cash ISA is probably the better option for you. It good to remember that, over the long term, inflation can erode your capital in real terms so getting a good rate of interest on your cash ISA should be a priority. If you are prepared to risk capital to achieve higher potential returns then a stocks and shares ISA may be the best option for you.
  3. Charges - Different ISA plans will have different charges. It is important that you are aware of what these are and how they could affect your ISA performance. These could be charges for transferring or closing an account early or a management charge which is applied to most stocks and shares ISAs. 

Which ISA is Right for You?

This depends on your savings goal and the amount or risk you’re willing to take. It’s generally advised that if you have debts, don’t have any other form of savings or will need to withdraw your cash in an emergency then you shouldn’t invest as your capital is at risk. It’s also difficult to withdraw your money quickly as you will need to sell your assets, even transferring can take 30 days or more.

If you do have some spare income, however, investing is a good way to see high returns on your money, as long as you are aware of the risks.

As another option, with certain types of Cash ISAs, you have instant access to your money, which makes it a flexible way to plan your finances. Alternatively, fixed rate ISAs are a good way to see guaranteed returns on your capital, if you can tie up your money for a year or more.

Is there a Charge for Transferring an ISA?

Your existing ISA manager cannot stop you transferring, but they may charge you for it. However, this is becoming less common, particularly with cash ISAs. You should contact your current ISA provider and confirm their policy on this before making a decision.

Are there any ISA Rules?

The rules on ISAs have been relaxed since April 2016 and you can now choose how you split your savings. While ISAs can be straight forward, there are some rules to follow and it’s useful to know before you get started:

  • Some accounts have penalties if you withdraw early, particularly fixed rate accounts. Be careful to check your provider’s rules as you could leave with less than you invested if you close early
  • You must use a transfer form if you want to transfer accounts. If you don’t follow the transfer procedure and simply withdraw the money yourself then you lose all tax benefits for that year
  • Transferring your ISAs should take no more than 15 days although transferring from a cash ISA to a stocks and shares ISA can take longer
  • You can’t have more than one account of the same type
  • ISAs are a good idea whatever your savings goal. With certain types of cash ISAs, you have instant access to your money, which makes it a flexible way to plan your finances. Otherwise you can potentially receive higher returns by tying up your money or investing.

It’s also important to remember that ISA allowance limits apply to everyone on an individual basis, so if you’re married or in a relationship, you can both hold your own ISA, each with the full allowance. This can make them an excellent way to save for large expenses such as a property, a holiday or a new car.

Types of ISAs

ISAs are available in two main types; within each type of ISA you can choose from a range of products to create a savings portfolio tailored to meet your needs. The two types of ISAs are:

  • Cash ISAs, which work like a regular savings account and feature the added benefit of tax-free interest.
  • Stocks and shares ISAs, which allow you to invest in funds, structured investments, or in the stock market. This extra risk can make for a potentially higher return.

Within the two types of ISA there are a range of options to choose from. For example, Cash ISA providers, such as banks and building societies, may offer both instant access and fixed-rate cash ISAs. This allows savers to select the product that best fits their requirements.

Stocks and shares ISAs can be invested into many different types of funds, structured investments, and directly into shares. This allows you to choose where you want to invest and how much risk you want to take with your money.

Important Risk Information:

This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.

Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial 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

How much can I pay into an ISA?

21st March 2019

Each tax year, there's a limit set by the government to the amount you can save and invest in ISAs: your “annual ISA allowance”. The allowances are intended to reward savers and encourage us to invest more to support our future retirements, without creating a tax haven that can be taken advantage of by very wealthy individuals who just want to avoid paying tax.

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