Guide

Home > Money Guide

ISAs: a Whole New Way to Save or Invest Money in the UK

UK residents have a wide choice regarding the many ways available to manage their savings. ISAs are among the most popular accounts in the UK because they allow the holder to decide whether to save or invest money and with a large number of benefits. By opening an ISA, which can also be called an Individual Savings Account, it will be possible to save or invest in a wide range of fields in a tax efficient way. This means that any transaction done through an ISA will always be protected from UK taxes. This particular type of savings and investment account is available for all UK residents over the age of 16. As a matter of fact, you can also open a special ISA to save money for your underage children, which will give them access to their money when they reach the age of 18 years old. Therefore, as stated above, ISAs can be opened for different aims, it’s up to the holder to choose if saving money or embarking on a new investment path in many different fields. For instance, stocks & shares isa will let you invest in stocks, bonds, shares, land, properties, commodities and so much more. Let’s go deeper into this matter.

How to manage your savings with an ISA

The most important thing to know when opening an ISA is that whatever type of account you decide to open, your money will always be tax protected. Nowadays, saving money is really important to try to ensure a more stable economic future. Also, having some savings aside is important if you have to face emergencies. ISAs can be in fact a good way to put money aside for your future and also to start a new investment journey. Most people decide to start invest their money in order to give it the opportunity to grow over time: as a matter of fact, a wisely planned investment has the potential to generate an economic growth. However, you should always keep in mind that investing money is risky. Even though there’s the chance your money will grow, it could also go down as well. This means the risk to end up getting less than what you deposited is always around the corner.

How much money can you put on an ISA?

ISAs always come with a restriction on the amount of funds you can deposit in a year. This value is called Annual ISA Allowance and it refers to the maximum amount that can be put on your account in a tax year. Currently, the allowance is set at £20,000 per year for all types of ISAs. On the other hand, if you decide to open a Junior ISA to save money for your children’s future, the allowance will be set at £9,000 per year.

The main types of ISAs available in the UK

Like previously mentioned, ISAs come in many shapes in order to meet the needs of as many people as possible. The Cash ISA is the most popular type of ISA because it resembles a regular savings account. The difference lies in the fact that your money will always be protected from tax. Innovative Finance ISA is another really popular kind of savings account which has been designed to invest in a peer-to-peer lending with the aim of getting interests. However, like every other kind of investment, it comes with risk since you’re giving your money the chance to grow, but you can also lose your capital. Stocks and Shares ISAs are really similar to regular investments accounts, because they let the holder invest in a wide range of fields, but in a tax efficient way. Lifetime ISAs on the other hand have been designed to help you put money aside for life related purchases, such as the first home. Lastly, there are Junior ISAs, which can be opened to save for underage children.