This episode of the Your Recipe for Financial Success podcast was published on 14th January 2021. You can listen again by heading to our Episodes page, or on your favourite podcast player.

In this episode, Julie, Emma and Becky are serving up everything you need to know about ISAs. A tasty way to make the most of your savings.

Episode Highlights

First and foremost, you may be asking yourself, what exactly is an ISA?

• ISA stands for Individual Savings Account. 
• They are tax efficient savings.
• Savers can pay up to £20,000 into an ISA account in this tax year (20/21)

What are the different types of ISA?

Cash ISA

• Cash ISAs can usually be opened through your bank/building society
• They are relatively safe however savers should be mindful of the effects of inflation on their savings over long periods of time
• You must be over 16 y/old to open a Cash ISA.

Stocks and Shares ISA

• Stocks and Shares ISAs should be considered as a medium to long term investment
• You can hold funds and sometimes shares in companies
• You must be over 18 years old to open a Stocks and Shares ISA.

Innovative finance ISA

• Innovative Finance ISAs use peer to peer lending platforms. So, put simply, your ISA investment will be passed on to another person who is looking to borrow money.
• It’s important to bear in mind that these types of ISA are not protected by FSCS.

JISA (Junior Individual Savings Account)

• This type of ISA can be opened by a parent or guardian of a child under the age of 16.
• A JISA can be held in cash or as stocks and shares.
• The savings limit for the 20/21 tax year is £9,000 per child.

Help to Buy ISA

• These ISAs are no longer available to new savers, they were designed to help savers buy their first home
• When you were ready to buy your first home, the government would then add a 25% bonus (up to £3,000) to your savings.

LISA (Lifetime ISA)

• You can pay a maximum of £4,000 in any one tax year into a LISA
• You must be between the age of 18 and 39 to open a LISA
• The money in your LISA must be used either for retirement (from age 60) or to buy your first home
• The Government adds a 25% bonus to your contributions paid in at the end of each tax year
• There may be a charge of 25% to withdraw money for use for any other reason than for your retirement or buying your first home.

If learning all about ISAs has got your stomach rumbling for more financial recipes, check out our other podcasts on our episodes page. Don’t forget about our Facebook page too where you can ask questions and join in discussions about all of our topics!