What is an ISA?

An Individual Savings Account (ISA) is a way for you to save or invest tax-efficiently.  This is because you won’t pay any Income Tax or Capital Gains Tax on the interest you earn or returns from a stocks and shares ISA.

You can save money directly into a cash ISA and keep it there to gain interest. Alternatively, you can use a stocks and shares ISA to invest in mutual funds and potentially give your money an opportunity to grow.

Unlike other types of savings accounts, there’s a limit to how much you can save into an ISA each tax year, which is called an ISA allowance.

Keep in mind, you need to be 18 or over and a UK resident to open an ISA with us.

Remember, as with any investment, the value of investments can go down as well as up and you could get back less than you paid in.

What is the ISA allowance for this tax year?

The ISA allowance for the 2020/2021 tax year is set at £20,000. You can choose to use this allowance by paying in a lump sum or smaller payments throughout the year.

You can actually pay as much money as you like into an ISA throughout a tax year and you can withdraw money whenever you like. However, the amount of money left in an ISA at the end of the tax year can’t be more than £20,000.

Laws and tax rules may change in the future. This information here is based on our understanding in April 2020. Personal circumstances also have an impact on tax treatment.

Can you have more than one ISA?

Yes, but keep in mind there are limits. You can’t open two ISAs of the same type in a single tax year. For example, you could open a cash ISA and a stocks and shares ISA, but not two cash ISAs.

If you do open more than one ISA in the same tax year, keep in mind that you can’t save more than £20,000 across all of them. For example, you could put £10,000 into a cash ISA and £10,000 into a stocks and shares ISA.

What are the different types of ISA?

There are four different types of ISA: Stocks and Shares ISAs, Cash ISAs, Innovative Finance ISAs and Lifetime ISAs.

You can find out a bit more about which type of ISA could be right for you by reading our article.

What is a Stocks and Shares ISA?

It’s a tax-efficient investment account that lets you invest your money with the aim of achieving greater returns over the longer term.  However, as with all investments the value can go down as well as up and you may get back less than you put in.

With Standard Life you can save for the future and invest in a way that suits your appetite for risk. You can also access a large range of funds so you don't have to pick individual shares. Our Easy investment option is managed for you by the team at Aberdeen Standard Investments and can help if you're new to investing or if you lack the time or confidence to do it yourself - that's why it's an easy option.

Alternatively with our DIY investment option you can pick and choose your investments yourself.

You can change where you are invested at any time.

Learn more or set up a stocks and shares ISA.

This ISA is arranged through and provided by Standard Life Savings Limited.

Should I invest in a Stocks and Shares ISA?

If you have access to short term ‘just in case’ cash, normally enough to cover 6 months income, then investing any additional savings is something you should consider.

If you have a significant amount of your money in cash, it may seem relatively secure but you might end up losing money over time.  That's because the interest rates paid on cash savings accounts, including Cash ISAs, are normally lower than the rate of inflation.  That means the real value of your savings might not grow and could even reduce over time.

Investing can be riskier in the short term, due to market ups and downs.  But, by investing some of your savings you have the opportunity for returns greater than the rate of inflation especially over the longer term, (more than 5 years). 

Can I control how risky it might be?

Yes, you’re in control. There's always some risk associated with investing your money in a stocks and shares ISA, but there can be benefits too.  It's up to you to weigh up the potential for growth that comes with increased risk and the likelihood that the value of your cash savings could be reduced over time.

Also, not all investments are the same.  You can pick and choose the investments that you feel comfortable with, taking more risk with some and less with others.  You should think about diversifying your investments by spreading the risk across different sectors and countries.

Generally, the more risk you take the greater the opportunity for potential returns, but also the greater opportunity for loss.

At Standard Life if you aren’t a confident investor or happy to pick your own funds we offer an easy investment range which is risk rated from 1 (lowest risk) to 5 (highest risk). 

Each MyFolio Index Fund is managed to a certain risk level, so your money will only be exposed to the level of risk you've said you're comfortable with.  And, because each fund invests in a lot of different investment types at the same time (known as diversification), it could help to smooth returns over the long term.

ISA comparison

There are different types of ISAs out there, each with different features and things to think about.

The table below helps you compare the differences between a stocks and shares ISA and a cash ISA:

 Stocks & Shares ISACash ISA
Where does my money go? Into funds or some providers allow you to invest directly into shares, bonds etc. It's a type of savings account where your money is saved as cash.
How long do you need to be prepared to save for? Medium to long term. This normally means at least five years. Up to you – there’s no recommended timescale.
How much can you save each year? This depends on the ISA allowance. For 2020/2021 this is £20,000. This depends on the ISA allowance. For 2020/2021 this is £20,000.
Is it tax-efficient? yes. Greater potential for your money to grow tax-efficiently if invested. Yes. You won't pay tax on any interest earned from cash savings.
Is there any risk? You need to be prepared to take some investment risk as you are choosing to invest in financial markets. There’s no investment risk but the value of your ISA may be affected by inflation.
Do I need to know about investments? Not necessarily. Many providers offer ready-made funds if you don’t want to pick your own investments. Nothing. Your money isn’t invested.
Can I access my money? Yes - There may be a delay for a small number of investment options. Yes - unless you’ve chosen a fixed term ISA.
Can I transfer other ISAs into an existing Standard Life Stocks & Shares ISA?

You can transfer an existing stocks and shares ISA and/or a Cash ISA to a Standard Life Stocks & Shares ISA with us without any loss of tax status.

We can't currently accept a transfer from either an Innovative Finance ISA or Lifetime ISA

You can instruct us to transfer an existing stocks and shares ISA and/or a Cash ISA to a Standard Life Stocks & Shares ISA with us without any loss of tax status.

We can't currently accept a transfer from either an Innovative Finance ISA or Lifetime ISA

 

Laws and tax rules may change in the future. This information here is based on our understanding in April 2020. Personal circumstances also have an impact on tax treatment.

We offer a Stocks & Shares ISA

With a Standard Life Stocks & Shares ISA you can save for the future and invest in a way that suits you best. With our Easy investment option we look after the investments for you, or with our DIY option you can pick and choose your investments yourself.


Set up a Stocks & Shares ISA


You will get to choose if you want the Easy or DIY option when you set up your new ISA.


This ISA is arranged through and provided by Standard Life Savings Limited.