There are four main types of ISAs available in the UK:
1. Cash ISA: A savings account that allows you to deposit a certain amount of money each year without paying tax on the interest earned. Cash ISAs can be further divided into instant access, notice, and fixed-rate accounts, depending on the withdrawal conditions and interest rates.
2. Stocks and Shares ISA: This ISA allows you to invest your money in various assets, such as individual stocks, bonds, and funds. The returns, including capital gains and dividends, are tax-free. However, investments carry some level of risk, and the value of your investments may go up or down.
3. Innovative Finance ISA (IFISA): This ISA is designed for investments in peer-to-peer lending platforms. It allows you to lend money to individuals or businesses through these platforms and earn tax-free interest on your loans. Keep in mind that these investments can be riskier than traditional cash or stocks and shares ISAs.
4. Lifetime ISA (LISA): A LISA is designed to help individuals save for their first home or retirement. It's available to those aged 18 to 39, and you can save up to £4,000 per year. The government provides a 25% bonus on your contributions (up to £1,000 per year). However, you can only use the funds for a first home purchase, or after you turn 60, or if you're terminally ill. Otherwise, you may face a withdrawal penalty.
➡️You can hold multiple ISAs, but you can only open and contribute to one of each type per tax year. The overall annual ISA allowance for the 2021-2022 tax year was £20,000. This amount could be split across different types of ISAs as desired.
✅It's essential to consult a financial advisor or visit the official UK government website for the most up-to-date information. Come and meet us @nurbhai_accounts for more indepth advise and how to get on your investment journey! #ifisa #lisa#cashisa #accountantlife #manchesteraccountant #personalfinance #businessfinance #investing #investmentstrategies