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How Many Types of ISAs are Available in the UK?

An Individual Savings Account, which you can also call ISA, is a savings account that allows you to save or invest your money depending on your preferences and financial situation.

Unlike many other accounts, an ISA allows you to perform a wide range of actions in a tax efficient way. This means that you will be able to save or invest your money and that it will always be protected by UK taxes. Let’s have a closer look on this matter.

What is an ISA?

When you open an ISA, your investments will always be tax-free. This is one of the main reasons why these accounts are so popular in the UK. However, it should always be remembered that any investment involves risks and that you could always find yourself having less than what you invested.

Either way, first-time investors are spoiled for choice when it comes to the different types of accounts available. As a matter of fact, you will be able to choose the one that best suits your financial situation and while also having the chance to transfer your money from one account to another if by chance you change your mind.

Nowadays, it is in fact easy to transfer ISAs from one type to account into another. Let’s have a look on the main types of Individual Savings Account available.

The first kind is the Stock and Shares ISA, which has been specifically designed so you can invest your capital in stocks, shares, bonds and so much more in a tax-efficient way. Cash ISAs are also really popular, because they’re really similar to regular savings account, except for the fact that they let you save while earning tax-free interest.

On the other hand, Lifetime ISAs are a good choice for people who want to start saving or investing money for their future. This account has been intended to help the holder make life related purchases, such us buying first home or for retirement.

Innovative Finance ISA is a different story, because it has been designed to let the holder lend money with the goal to get it back with interest and it’s probably the riskier option. Lastly, Junior ISAs are special Individual Savings Accounts intended for parents to save money for their underage children. A JISA can also be opened by a legal guardian and other family members and friends can also contribute. 

What’s the Difference between and ISA and a GIA?

Many people struggle to tell the difference between an Individual Savings Account and a General Investment Account (GIA). However, ISAs and GIAs are two really different types of account.

While the ISA has been designed to save and invest capital with tax benefits, the GIA is a General Investment Account intended to let the holder invest in a wide variety of fields outside of tax wrappers.

This kind of account lets you withdraw your money at any time and that’s why it is a really good choice for people under the age of 55 who don’t want to lock their money in a pension fund and want to have free access to it.

While ISAs come with a restriction on the amount of money you can deposit (which currently amounts to £20.000 per year), a GIA lets you deposit how much you want. On the other hand, if an ISA lets you save or invest your money while protecting it from tax, by opening a GIA you will have to pay contribution according to your tax situation.

Since these are two very different types of accounts, you will have to base your choice on your financial situation and above all, on your needs.

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