NAVIGATE THE NEW ISA MAZE
There’s more choice than ever — so which scheme’s right for you?
FOR years, Isa savers had the simple choice of putting money into stocks and shares, leaving it in cash in a bank or building society, or a combination of the two. Then politicians, realising Isas were a hit with voters, muddied the waters by launching a raft of new types. Now, there are no fewer than
seven versions of the tax-free accounts — each with varying rules and savings limits. Here, Money Mail’s SYLVIA MORRIS helps you navigate the maze . . .
1. CASH OR STOCKS AND SHARES ISA (LAUNCHED 1999)
YOU can put your money into a tax-free savings account, or invest in funds, without paying any extra tax on your income or capital gains.
You can pick cash, stocks and shares, or a mixture of both and switch between them whenever you want to do so.
Who can open one?
For a stocks and shares Isa, UK residents aged 18 or over. For a cash Isa, you must be at least 16.
How much can I save?
This tax year, anything between £1 and £20,000. The limit will stay the same for the next tax year.
Where can I open one?
Banks, building societies and National Savings and Investments (NS&I) all offer the cash version. See Page 50 for our Best Buys table.
Stocks and shares Isas are available through independent financial advisers or fund platforms such as Hargreaves Lansdown, Fidelity International and AJ Bell.
2. JUNIOR ISA (2011)
A SAVINGS or stocks and shares Isa for parents to save for their children. Any money is locked away until your child’s 18th birthday, when the account becomes a basic Isa. Your son or daughter will take control of the cash when they reach 16.
Who can open one?
Parents and carers of children aged under 18, born on or after January 3, 2011, or before September 2002. Between these dates your child will have had a Child Trust Fund — which you can switch into the Junior Isa. Children aged 16 to 18 can have both a Junior Isa and a basic Isa.
How much can I save?
Up to £4,260 for this tax year, rising to £4,368 next tax year.
Where can I open one?
Banks and building societies offer the cash version. The shares version is available through fund platforms such as Fidelity International, AJ Bell and Hargreaves Lansdown.
3. INHERITANCE ISA (2014)
AN exTrA, one- off Isa allowance (or, in industry jargon, an additional permitted subscription) on top of the usual £20,000.
Who can open one?
Widows, widowers and bereaved civil partners who lost their spouse or civil partner from December 3, 2014. You have three years after their death to use it, or 180 days after the administration of the estate has been completed, whichever is later.
How much can I save?
The value of your partner’s Isa plus the interest. The provider will close your partner’s Isa on their death, and you put it into one in your name.
Where can I open one?
Some banks and building societies offer the cash version. Go to fund platforms or advisers if you want shares instead.
4. HELP TO BUY ISA (2015)
A MONTHLY savings scheme to help first-time buyers save for a deposit. The Government adds a 25 pc bonus when you buy your first home. You can use it to buy properties costing up to £250,000 outside London — or £450,000 in London.
Who can open one?
Anyone 16 or over who has not previously bought a home of their own. These Isas are on sale until November 30, but you can keep saving into it until November 30, 2029. Savers have until December 1, 2030 to claim their bonus.
How much can I save?
Up to £200 a month. You can kickstart it with a £1,000 lump sum.
Where can I open one?
Banks and building societies, which also add tax-free interest. Barclays, Halifax, Virgin Money and Nationwide all pay around 2.5 pc.
5. FLEXIBLE ISA (2016)
A BASIC Isa that lets you put in your whole £20,000 allowance, take money out and replace it without losing any of your tax-free entitlement. With the usual basic Isa you wouldn’t be able to replace any withdrawn cash once you’d hit the £20,000 limit.
Who can open one?
Anyone aged 18 or over for a stocks and shares Isa, or aged at least 16 for a cash Isa.
How much can I save?
Up to £20,000.
Where can I open one?
It’s up to providers whether they offer the flexibility, so check first.
6. INNOVATIVE FINANCE ISA (2016)
YOU save with peer-to-peer lenders — businesses that match savers with borrowers — or invest in start-up companies through crowdfunding websites. They are riskier than the basic Isa and your money is not covered by the Financial Services Compensation Scheme.
Who can open one?
Anyone aged 18 or over.
How much can I save?
Up to £20,000, paying as much as 7 pc.
Where can I open one?
From peer- to- peer lending and crowdfunding websites.
7. LIFETIME ISA (2017)
A HYBrID Isa aimed at saving for a deposit for your first home or for retirement. The Government adds a 25 pc bonus to your savings when you turn 60, or buy a first home worth up to £450,000. It offers a better deal than a help to buy Isa for future homebuyers who can save more than £200 a month, as you can build up a deposit faster — as long as you don’t buy your property for at least a year after opening your account.
Who can open one?
Anyone aged 18 to 39.
How much can I save?
Up to £4,000 a year.
Where can I open one?
Cash versions are available from Skipton, Newcastle and Nottingham building societies, paying around 1 pc, or share versions through some fund platforms.
For the best value deals on buying shares Isas, go to: thisis money.co.uk/platforms