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.

What is an ISA?

An Individual Savings Account (ISA) is a way you can save or invest tax-efficiently. This is because you won’t pay tax on any interest or returns you make.

You can save money directly into a Cash ISA and keep it there to gain interest. Alternatively, you can use a Stocks & Shares ISA to invest in different types of investments and give your money a chance to potentially 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.

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.

Laws and tax rules may change in the future. This information here is based on our understanding in April 2020. Personal circumstances and where you live in the UK  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 & 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 another £10,000 into a Stocks & Shares ISA.

What are the different types of ISA?

We’re looking at four types of ISA: Stocks & 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 guide to different types of ISA.

What is a Stocks & Shares ISA?

It’s a tax-efficient investment account that lets you invest your money with the aim of achieving greater returns over the medium-to-long term (five years or more).

However, as with all investments the value can go up and down and you may get back less than you put in, even in the short term.

With a Standard Life Stocks & Shares ISA 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 if you’re looking for choice and want to select your own funds.

If you're new to investing or if you lack the time to do it yourself, you can select our Easy option. This allows you to select a MyFolio Index Fund based on your attitude to risk. The MyFolio Index Funds are run by Aberdeen Standard Investments.

Alternatively, if you do feel more confident and have time to regularly review your investments to make sure they’re still on track, you can pick and choose from the full range of thousands of funds with our DIY option.

You can change where you are invested at any time.

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

Should I invest in a Stocks & Shares ISA?

It’s important to remember that investing through a Stocks & Shares ISA can be risky due to market ups and downs.

You might decide to save your money in cash, instead of investing it. While this this is a secure way to save money, the value of your savings could be lowered if the rate of inflation surpasses the rate of interest on your savings. That means the value of your savings could reduce over time because the interest rates paid on cash savings accounts, including Cash ISAs, will be lower than the rate of inflation.

Ultimately, it’s up to you to choose between saving and investing, as well as understanding your own appetite for investment risk. You can try this risk questionnaire  to help find out what level of risk you’re comfortable with.

Can I control how risky it might be?

You decide how much risk to take. There’s always some risk associated with investing your money in a Stocks & Shares ISA, but there can be benefits too.

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 also 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 opportunity for loss.

If you don't feel you have the time or know-how to manage your investments on a day-to-day basis or you’re just looking for someone to do the heavy lifting for you, you can select our Easy option, which offers an 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 the funds invest 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, each with different features and things to think about. The table below helps you to compare the differences between a Stocks & Shares ISA and a Cash ISA

Graph

Stocks & Shares ISA

money bag

Cash ISA

Where does my money go?


Into funds or some providers allow you to invest directly into shares, bonds etc

Into 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 you can pay up to £20,000 into one ISA or spread it between different types of ISA.

This depends on the ISA allowance. For 2020/2021 you can pay up to £20,000 into one ISA or spread it between different types of ISA.

Is it tax-efficient?


Yes. Greater potential for your money to grow tax-efficiently if invested. You won't pay tax on any income you take from your ISA.

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.

How much do you need to know about investments?


Not much. 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 - This may be subject to notice for a small number of investment options.

Yes.

Can I transfer other ISAs into an existing Standard Life Stocks & Shares ISA?


You can transfer an existing Stocks & 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 & 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.

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