Different types of ISA
Each year you can choose whether you want to invest in to one type of ISA, or whether you want to split the allowance between different types. However, even if you choose to split it, you can’t invest more than a total of £20,000 across the different types. Here are some of the different types available in the market.
A Cash ISA
A Cash ISA is more similar to a traditional savings account, However, when you hold a Cash ISA, you don’t pay any tax on interest you earn. With a bank or building society’s savings account, you pay Income Tax on earnings exceeding £1,000.
An Innovative Finance ISA
An Innovative Finance ISA enables you to become a lender– providing loans to approved individuals and businesses via peer-to-peer lending in return for fixed-returns over a set period of time, paying no tax on the interest you earn.
Investors (IFISA holders) are matched up with borrowers. A borrower could be a business, an individual or a property developer. Without a bank as a middle-man, there is more of a direct lender-borrower relationship, which can present greater opportunity. However, as with any investment the bigger the opportunity, it can also present risk, so it’s important to discuss your appetite for risk and return with a financial advisor.
Stocks and Shares ISA
With a stocks and shares ISA, also known as an investment ISA, your money is invested in assets like shares, bonds, property, and commodities and similarly to the other ISA’s, you don’t need to pay any tax on capital gains you make, or income (interest and dividends) you earn. Put simply, you can keep everything you earn from your investment after all charges and fees are taken. Stocks and Shares do present some risk because they are subject to market fluctuations and there is no guarantee you’ll get your investment back.
|AGE TO OPEN||ANNUAL DEPOSIT LIMIT||SAVINGS AT RISK?||WITHDRAWAL RESTRICTIONS||GOVERNMENT BONUS?|
|CASH ISA||16+||£20,000||No||No, unless you fix||No|
|STOCKS & SHARES ISA||18+||£20,000||Yes||No, but may incur fees||No|
|LIFETIME ISA||18-39||£4,000||Depends||Yes||Yes, 25%|
|JUNIOR ISA||0-17 (1)||£9,000||Depends||Yes||No|
Find out more about Acorn’s Investment offerings and see how you could ultimately invest in the South West property market.