The value of your investment can go down as well as up and you may get back less than you paid in. Laws and tax rules may change in the future. Your own circumstances and where you live in the UK also have an impact on tax treatment.

Comparing ISAs

You could save for the future with an Individual Savings Account (ISA) to give your money the opportunity to grow in the medium to long term. With so many different types of ISA available in the market, you might not be sure which one is right for you.

To help you decide, we look at the different ISA types, features and other things you should think about below.

Stocks & Shares ISAs

Money saved into a Stocks & Shares ISA is invested in funds and other types of investments. One of the benefits of a Stocks & Shares ISA is that you don’t pay tax on any value you might gain.

With the Standard Life Stocks & Shares ISA, you can either choose and manage your own investments or choose a fund that matches your risk appetite and let experts manage your investments for you.

Remember: Investment returns aren't guaranteed. The value of your investment can go down as well as up and may be worth less than you paid in.

You can find out more about the Standard Life Stocks & Shares ISA here.

Stocks & Shares ISA

Other types of ISA

Cash ISAs

One of the benefits of Cash ISAs is that you won’t pay any tax on the interest you earn. There’s also no investment risk as your money isn’t invested. But keep in mind that the value of your savings could be affected by inflation.

Lifetime ISAs

Lifetime ISAs are for people aged 18-40. Money saved or invested into this type of ISA can only be used towards your first home or to help you save for life after retirement.

You can save up to £4,000 a year into a Lifetime ISA. The Government tops this up by paying in an extra £1 for every £4 you save. This takes the total you can save in a year up to £5,000.

The money you save into a Lifetime ISA will also use up some of your yearly ISA allowance, but the Government bonus doesn’t count towards it. Read our What is an ISA?’ guide to learn more about how your ISA allowance works.

If you’re saving into a Lifetime ISA to help fund your retirement, keep in mind that your Government bonus and savings won’t be tax-free if you take them before age 60. If you take it early you will have to pay a 5% exit penalty and charges.

You can read more about Lifetime ISAs on the Government's website.

Innovative Finance ISAs

This option lets you invest the money through a peer-to-peer (P2P) lending company. Your savings are held in a tax-free ISA while the company loans money to individuals and businesses. The value of your ISA can grow as the loans generate interest.

As with all ISAs there are risks to think about, so you would have to be comfortable with the level of risk that comes with P2P lending. Here are some risks to be aware of:

  • Innovative Finance ISAs aren’t covered by the Financial Services Compensation Scheme, meaning you won’t be compensated if a P2P lending company collapses.
  • Any money you lend to borrowers is considered to be at your own personal risk, and is not the responsibility of the P2P lending company.
  • There’s also a risk that the borrower will default, meaning they are unable to repay the money you loaned them.
  • If there aren’t many people wanting to take out P2P loans, you might find that your money is sitting still and not generating any interest.

Junior ISA

Junior ISAs give you a tax-free way to save money for your child’s future. Parents and guardians can save money into this type of ISA for children under the age of 18. You can make monthly deposits from £10 a month, but keep in mind that Junior ISA rules and limits change each tax year.

You can find out more about Junior ISAs in our MoneyPlus article.


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