Everything you need to know about ISAs

An Individual Savings Account (ISA) is a method for you to save up to £20,000 (current limit for the 2018/19 tax year) tax free! You won’t pay tax on any interest on your investment as well as not having to pay any income or capital gains tax on the monies invested.

You can open an ISA lots of different ways including via your; bank/building society, a peer-to-peer lending service, a crowdfunding company, a stock-broker, a credit union, a friendly society and another financial institution.

There are 4 variations of ISA, it is possible for you to put your annual allowance into one of each kind of ISA or split your allowance across some/ all of the other types.

The different types of ISA are;

•Cash ISA
Cash ISA will generally include savings from a bank and building society

•Stocks and shares ISA
A stocks and shares ISA can include shares in companies, unit trust and investment funds, corporate bonds and government bonds.

•Innovative finance ISA
An innovative finance ISA allows for peer to peer lending without the use of a bank, as well as crowdfunding debentures – investing in a business by buying its debt.

•Lifetime ISA
A lifetime ISA can be used to buy your first home or save for later life, you must be over the age of 18 but younger than 40 to open a lifetime ISA. You are only able to put £4,000 into a lifetime ISA each year, the government with add a 25% bonus to your savings (up to a maximum of £1,000 per annum). These funds can be held in cash or within stocks and shares.

You can also open a Junior ISA for your child; this has an annual allowance of £4,000 and can hold stocks and shares or cash.

If you would like to consider opening an ISA or receiving information on which ISA might be more suitable for your own personal needs and circumstances, please contact Sound Financial Management via telephone (01752 207070) or via email (info@sound-financial.co.uk).

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