Types of ISA Account
This is an ISA account guide. Currently there are 4 main ISA products available:
Innovative Finance ISAs
Benefits
The benefit and reason to invest in an ISA account product is that all interest, dividend payments, income and capital gains are tax free whilst held in the ISA wrapper.
Who can open an ISA Account?
Cash ISAs can be opened by a UK resident over the age of 16
Stocks and Shares ISAs by a UK resident over the age of 18
LISA’s by a UK resident between the ages of 18 and 39
Innovative Finance ISAs ISAs by a UK resident over the age of 18
All ISA account products can be held only in the name of the individual investor; jointly held accounts are not permissible.
Allowance
As at tax year 18/19 the yearly allowance is £ 20,000.00.
The tax year runs from April 6th to April 5th of the following year, e.g., April 5th, 2018 to April 5th, 2019.
Investors may invest in one or more of the above products in the same tax year but cannot exceed the £ 20,000.00 allowance across all products.
EXAMPLE
An investor could subscribe £ 8,000.00 in a cash ISA, £ 10,000.00 in a stock and shares ISA and £2,000.00 in an Innovative ISA.
EXAMPLE
An investor could subscribe £ 20,000.00 in a stocks and shares ISA.
NOTE: The current subscription limit for LISAs is £ 4,000.00. Using the full allowance into a LISA would therefore leave £ 16,000.00 available to subscribe into any of the other 3 ISA products.
EXAMPLE
An investor could subscribe £ 10,000.00 to a cash ISA, £ 4,000.00 to a LISA and £ 6,000.00 to a stocks and shares ISA.
One ISA of each type per tax year rule
Investors can only subscribe to one of each type of the same ISA account product within the same tax year. Hence you cannot subscribe £ 10,000.00 into a cash ISA with one provider and £ 10,000.00 into another cash ISA with a different provider. If you held an existing ISA account for which you have subscribed in the current tax year and wished to open an ISA account of the same type with another manager, you would have to transfer the existing ISA to the new manager.
Related Products
There are also 2 related products: JISAs (Junior ISA accounts) and Help to buy ISAs.
JISA’s (Junior ISAs), as the name suggests, this is an ISA account that can be opened for children up to the age of 18, the current yearly allowance is £ 4,260.00. There is also the Help to buy ISA account, though this will no longer be available to new investors from 1st December 2019. This ISA account guide will be supplemented by further guides of ISA products in more depth in separate posts.