ISAs

What is an ISA?

An Individual Savings Account (ISA) is a tax-efficient wrapper that allows you to grow your savings without paying any tax on the return on your money. ISA’s can be split into two main categories based on the assets they can hold, Cash ISAs and Stocks and Shares ISAs. With a Cash ISA, you save money in a traditional savings account within an ISA tax wrapper, while with a Stocks and Shares ISA, you can invest in various other assets classes such as equities (Stock & Shares), Bonds, Alternatives and Cash.

Benefits of ISAs

• Tax Free – Unlike regular savings accounts or directly held stocks, where interest or dividends earned may be subject to income tax, interest or dividends earned are tax-free.

• Flexible Investment Options – ISAs provide flexibility in terms of allowing individuals to hold different assets in an environment where all investment growth is free of income and capital gains tax.

• Accessibility – ISAs offer easy access to your funds. Depending on the type of ISA, you can withdraw money at any time without losing the tax benefits.

Types of ISAs

Within each type of ISA you can choose from a range of products to create a portfolio tailored to meet your needs. The types of ISAs are:

• Cash ISAs, which work like a regular savings account and feature the added benefit of tax-free interest.
• Stocks and shares ISAs, which allow you to invest in funds, structured investments, or in the stock market. This extra risk can make for a potentially higher return.
• Lifetime ISAs, which can be used to buy your first home or save for retirement. You need to be over 18 but under 40 to open a Lifetime ISA. You can put up to £4,000 each year until you’re 50 providing you make your first payment before you are 40. There’s a 25% government bonus on offer, up to a maximum of £1,000 per year.

If you would like to arrange an initial meeting with one of our financial advisers to discuss investment options, please contact the SMH Financial Services team on info@smh.group or 01142 664 432.