The tax year may have begun back in April, but it is never too late to make the most of your ISA allowance.
With numerous types ISAs each with their own set of rules it’s easy to feel overwhelmed and difficult to know which one is right for you. In this post we take a look at the various types of ISAs and how they can be used to ensure you’re making the most out of your allowance.
Can I open a Cash ISA and a Stocks and Shares ISA?
There are countless different ISAs but the majority fall under the umbrella terms of ‘Cash’ or ‘Stocks and Shares’. You can open and invest into one Stocks and Shares ISA and one Cash ISA per tax year. You could split your annual allowance in whatever way you please and you can open just a Cash or just a Stocks and Shares ISA if you wish.
Cash ISAs
Cash ISAs are simply savings accounts that will return you interest that is tax free. You can pay into one Cash ISA per year, but you can open multiple Cash ISAs as the new tax years roll past.
One popular type of Cash ISA is the Help to Buy ISA. It is for first-time buyers looking to save a deposit for their first home. The government will add 25% to whatever you save into your ISA. You can save up to £200 per month. This means the government will add up to £50 per month and the maximum bonus that can be earnt is £3,000. New savers can invest in a Help to Buy ISA up until 30th November 2019.
Stocks and Shares ISAs
With a Stocks and Shares ISA you are investing, as opposed to saving as you are in a Cash ISA. The most common Stocks and Shares ISAs include investments into bonds, shares and funds. You can pay into one Stocks and Shares ISA per year, but you can open multiple Stocks and Shares ISAs over the coming tax years.
What is an Innovative Finance ISA?
When you invest in an IFISA, your money is going to borrowers. In return, you will receive interest based on the period of time you are happy to invest your money. You can only pay into one IFISA per tax year.
What is a Lifetime ISA (LISA)?
Launched in June 2017, the LISA is a newcomer to the ISA repertoire. You can only obtain a Lifetime ISA if you are aged 18-39 and the savings can be used to secure your first property or save for retirement. For every £4 you save, the government will supplement with a further £1. You can hold multiple LISAs at one time, but you may only pay into one per tax year.
How many ISAs can I pay into per tax year?
You can open multiple ISAs, but there is a limit on how you can spend your £20,000 balance each tax year. As a maximum per year you can pay into:
- 1 Cash ISA
- 1 Stocks and Shares ISA
- 1 IFISA
- 1 Lifetime ISA
You can split your allowance across the four different ISAs however you’d like, or simply put your money into one. However, check any limitations of each ISA, as some have investing or savings caps.
The Wellesley Property Bond
The Wellesley Property Bond is ISA eligible which means you can invest in the bond using your ISA allowance. Simply register online for a Wellesley ISA account or contact us via 0800 888 6001 or [email protected] for further information.