This is a guide that explains what ISAs are and the different kinds of ISAs that are available.
What is an ISA?
ISA stands for Individual Savings Account. An ISA allows you to save or invest money in a tax-free way.
What is a Junior ISA?
Junior ISA is an Individual Savings Account that is set up by a parent or guardian for their child. Contributions can be made by family and friends and funds can only be accessed by the child upon their 18th birthday.
What is the ISA allowance?
There is a limit, set by the Government, as to how much you can put into an ISA every tax year, which is called your “ISA Allowance”.
The latest ISA allowance for the tax year 2020-2021 for Adult ISA is £20,000 and for Junior ISA is £9,000.
What kinds of ISA are there?
Cash ISA
This is a savings account that allows you to save money, without having to pay any tax on the interest you earn.
Stocks and Shares ISA
Also known as Investment ISA, it allows you to invest your money in a range of assets, such as stocks and shares, bonds and commercial properties, in a tax-free way.
Lifetime ISA
Intended for a deposit for a first home or towards retirement, with a monthly bonus added to your contributions up to the age of 50.
Innovative Finance ISA
Enables you to lend to others via an online peer-to-peer platform, without paying tax on any interest earned.
The Transport Friendly Society offers an Adult Stocks & Shares ISA and a Junior Stocks & Shares ISA
Frequently Asked Questions
Who can open an ISA?
You are eligible to open an ISA if you are 18 or over and resident in the UK for tax purposes. If you are under the age of 18, a Junior ISA can be opened on your behalf.
Can I have more than one ISA?
You may only have one Cash ISA and one Stocks and Shares ISA, which you are contributing to in any one year.
Can I have a Tax-Free Savings Plan and an ISA?
Yes, you can have both, as your annual ISA allowance is separate from your Tax-Free Savings plan.
How long can I save for?
There is no specific term, but in order to take full advantage, investing in a Stocks and Shares ISA should be viewed as a long-term investment of five to ten years.
Please remember that the value of your investments can go down as well as up, so you may get back less than what you pay in.