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Which ISA could be right for me?

There’s an ISA for – pretty much – everyone. Discover the key differences between different ISAs.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

In 1999, ISAs were introduced giving savers and investors a tax-efficient way to squirrel their money away. At the time, you could only shelter up to £7,000 from the taxman in ISAs – today in the 2019/2020 tax year, this stands at an impressive £20,000.

And it’s not just the annual allowance that’s soared in recent years, so too has the number of ISAs that you can spread your £20,000 allowance between.

Opportunities could abound if you’re able to pick the right ISA(s) for your circumstances and they meet your needs. Below, we summarise the key differences between each of the main ISA types and their tax benefits.

The information outlined in this article is correct for the 2019/20 tax year. It is not personal advice, if you are unsure if ISAs are right for you, seek advice. Please remember that ISA and tax rules change and benefits depend on individual circumstances. Unlike the security offered by cash, investments can fall as well as rise in value so you could make a loss.

Compare ISA accounts

Here is a table outlining the main differences between the different types of ISAs. Since they’re all ISAs, they’re all sheltered from UK income and capital gains tax. Charges will vary between products and any investments you may choose to hold within them.

Scroll across to see the full table.

Type of ISA Overview Eligibility Maximum contribution Best for

Stocks and Shares ISA

A simple way to invest up to £20,000 annually free from UK tax
  • UK resident
  • Aged 18+
£20,000 Individuals who want to invest their money tax-efficiently over the long term (5 years or more)

Cash ISA

Works like a savings account, except there’s no tax to pay on the interest
  • UK resident
  • Aged 16+
£20,000 Individuals who need savings in the short term (i.e. next five years) or don’t want to take the risks of investing. For example, saving for a holiday or deposit on first home

Lifetime ISA

Save and invest for your first home or later life, with up to £1,000 per year in extra help from the government
  • UK resident
  • Aged 18-39
£4,000 per year until age 50 (contributions count towards your £20,000 ISA allowance) Adults under 40 saving for first home. Or for withdrawals after age 60. Withdrawals not for an eligible first home purchase or later life may be subject to a 25% government charge, so you could get back less than you put in

Junior ISA

A tax-efficient way to save or invest for children under 18, and anyone can add money to it
  • Parents or guardians can open a Junior ISA for their child, if the child is a UK resident
  • Children born between 1 September 2002 and 2 January 2011 need to transfer their Child Trust Fund to open a Junior ISA
£4,368 Those looking to build a pot of money for their child’s future. Money becomes the child’s when they turn 18, and could go towards a deposit on their first home or university fees

Innovative Finance ISA

Peer-to-peer lending to other investors – often offers higher interest but your capital is more at risk with a cash ISA
  • UK resident
  • Aged 18+
£20,000 Individuals who want a higher rate of interest from their cash ISA and are willing to accept the additional risks. You’ll need to make sure the scheme is regulated by the FCA

A couple of FAQs

How can I split my £20,000 ISA allowance?

You can split your ISA allowance between a Stocks and Shares ISA, a Cash ISA, an Innovative Finance ISA and a Lifetime ISA (up to £4,000 per year). For example, if you wanted to divide your ISA allowance between cash and investments, you could put £5,000 in a Cash ISA and then the remainder (£15,000) in a Stocks and Shares ISA.

More on ISA allowances

How many ISAs can I have?

You can have any number of the ISAs above across different tax years – except the Junior ISA where you can only have one of each type, cash or stocks and shares. But there’s an important factor to bear in mind – you can only pay into one of each type each tax year. So, if you’ve paid into a Stocks and Shares ISA this tax year, for example, you’ll need to wait until next tax year (from 6 April) to pay into another one with a different provider, but you could have a Cash ISA if you have left over allowance.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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