What an ISA is and how it Works
An ISA is an individual savings account that allows you to save money over a longer term without paying tax on your interest. There are many benefits that come with using an ISA to save. You don’t pay tax on an ISA providing you don’t go over your allowance of £20,000. You are also exempt from paying capital gains tax on any interest you make on your ISA. Here you can access the different sections of our Complete ISA Guide via the toolbar on the left.
This can make saving with an ISA a very attractive way to earn more money on your savings and help you meet your financial aspirations. Whether you’re saving for university fees, a deposit on a home or for your retirement, GPM-Invest can introduce you to many products offering you much higher returns than your high street bank.
Depending on your financial objectives, you may be looking for a high interest ISA or a 5 Year Fixed Rate ISA. We can advise on the current top ISA rates and tailor products to your individual circumstances. For instance, if you’re looking for the best ISA rates for over 60s, we’ll source the ISAs that best match your personal risk appetite.
There are many different types of ISA to help you save and invest depending on your eligibility and financial objectives. At GPM-Invest our team is dedicated to helping you make the right investment decisions by searching the market on your behalf to find the best products for financial future.
If you are already invested in ISAs, don’t worry! You can still gain an advantage from our services so if you’re wondering “how can I improve my ISA”, contact us today to find out more.
The Different Types of ISA Available
There are seven different types of ISA available. However, the most common are Cash, Stocks and Shares, Help to Buy and Innovative ISAs.
Cash ISAs are tax free savings accounts. Any interest you earn doesn’t count towards your personal savings allowance so if you earn a higher rate of interest, you can protect more of it in your ISA. Just like normal savings accounts, there are a variety of cash ISAs available, including instant access, regular savers and fixed-rate deals. You can withdraw your money immediately at any time.
Stocks & shares ISAs are typically managed by an online service, broker or fund manager. This allows you to invest in funds, shares and bonds. A bond is a type of corporate or government loan or you can choose to buy shares in individual companies using your stocks and shares ISA. Some stocks & shares ISA providers may allow you to hold some of your allowance as cash within the stocks & shares ISA. However, you’re free to open separate accounts if you prefer and all the money you put in is free from capital gains and tax.
Help to Buy ISAs are for first time home buyers only. You can save £1,200 in the first month of opening, and then £200 per month thereafter. When you use the funds to buy your first home, the government will add a 25% bonus (up to a maximum of £3,000) onto your savings to help with your deposit.
Innovative finance ISAs are used as a way to provide funding for businesses. The businesses held in innovative finance ISAs are usually property-based and depend on the uplift of value once planning permission has been sought and developments have been completed. These often pay much higher rates of returns and this interest isn’t taxed.
You can have any number of the four main ISA types but you can only pay in to one of each type each tax year. You need to make sure the money you put in across all your ISAs doesn’t go over your ISA allowance for the relative tax year.
The UK tax year runs from 6th April to 5th April and there is a maximum allowance available to you to put into ISAs each year. You have until the 5th April each year to add the money to your ISAs and the allowance each year doesn’t carry over. Your ISA allowance doesn’t include the total amount that’s already invested in ISAs from previous tax years, or any money they have earned you.
You must be a UK resident and over the age of 16 to have some types of ISA. From the age of 18 you can also have a Stocks and Shares ISA and Innovative ISA. It is not possible to have a joint ISA or open an ISA for another adult.
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The investment projections we show are never a guaranteed predictor of future performance – they are there to give you context and help you make decisions about the kind of portfolio which may best suit your individual investment goals. You should not base your investment decision on past performance. With investment, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. If you are unsure if any of our products are the right choice for you, please seek independent financial advice.