Making the most of your savings and investments starts with choosing the right strategy. With various ISA options available, understanding which one suits your financial goals can be challenging. Getting expert ISA advice can help you find a tax-efficient savings solution and make more informed investment decisions with confidence.
An Individual Savings Account (ISA) is a tax-efficient savings and investment vehicle available to UK residents. The primary advantage of an ISA is that any returns—whether in the form of interest, dividends, or capital gains—are free from income tax and capital gains tax. This makes ISAs an attractive option for individuals looking to save or invest without worrying about taxes on their gains.
Cash ISA
A Cash ISA functions like a traditional savings account, but with the benefit of tax-free interest. It is a low-risk option, as your savings are protected and you won’t lose money unless inflation erodes its value over time. Cash ISAs are suitable for risk-averse savers who want to keep their money safe while earning tax-free interest.
Innovative Finance ISA (IFISA)
An IFISA allows individuals to invest in peer-to-peer lending platforms. In this type of ISA, you lend money to individuals or businesses, and the returns you receive from repayments are tax-free. However, IFISAs carry higher risk as the borrower may default on the loan, and they are not protected by the Financial Services Compensation Scheme (FSCS).
No advice given by Digby Associates for a Innocative ISA.
Lifetime ISA (LISA)
A LISA is designed to help individuals either save for their first home or for retirement. Individuals aged 18 to 39 can open a LISA and contribute up to £4,000 annually. The government adds a 25% bonus to your contributions, up to £1,000 per year. LISAs have withdrawal restrictions: if the money is not used for a first home purchase or withdrawn after the age of 60, penalties may apply.
You will incur a lifetime ISA government withdrawal charge (currently 25%) if you transfer the funds to a different ISA or withdraw the funds before age 60 and you may therefore get back less than you paid into a lifetime ISA.
By saving in a lifetime ISA instead of enrolling in, or contributing to an auto-enrolment pension scheme, occupational pension scheme, or personal pension scheme:
(i) you may lose the benefit of contributions from your employer (if any) to that scheme; and
(ii) your current and future entitlement to means tested benefits (if any) may be affected.
Stocks & Shares ISA
A Stocks and Shares ISA allows you to invest in a range of assets, including stocks, bonds, funds, and other financial instruments. While this type of ISA carries more risk due to market fluctuations, it offers the potential for higher returns. Importantly, any gains or income generated within the ISA are tax-free, even if the investments perform well. This makes it a popular choice for long-term investors.
For ISA's Investors do not pay any personal tax on income or gains, but ISAs may pay unrecoverable tax on income from stocks and shares received by the ISA managers.
Tax treatment varies according to individual circumstances and is subject to change.
Stocks and Shares ISAs invest in Corporate bonds; stocks and shares and other assets that fluctuate in value.
Each tax year, individuals have an ISA allowance, which is the maximum amount they can contribute to their ISAs. For the 2025/26 tax year, the annual allowance is £20,000.00, which can be spread across the different types of ISAs (Cash ISA, Stocks and Shares ISA, LISA, and IFISA), but you cannot exceed this limit in total.
ISAs are popular due to their tax advantages. Unlike traditional savings or investment accounts, any interest, dividends, or capital gains made within an ISA are free from tax, meaning you can retain more of your money.
In summary, ISAs are versatile savings and investment tools that allow individuals to grow their wealth while avoiding taxes on returns, making them a key part of many people’s financial planning strategies.
If you have any questions regarding investing in ISAs please get in touch with our team of qualified financial advisers for a no obligation chat.
The London Stock Exchange was opened by Elizabeth I in 1571.
During the 17th century, stockbrokers were not allowed in the Royal Exchange due to their perceived rude manners they instead operated from other establishments in the vicinity, notably Jonathan’s Coffee-House.
Yes, you can pay into multiple ISAs in a year, but the total you pay into all ISA’s in the tax year can not exceed the £20,000 limit.
A Cash ISA is better for those wanting risk-free savings, while a Stocks & Shares ISA offers higher potential returns but with investment risk. The right choice depends on your risk appetite and investment horizon.
manufacturing while supporting companies with strong ethical practices.
Yes, but some ISAs have restrictions so you need to understand the nature of your specific product.
Flexible ISAs allow you to replace withdrawn funds within the same tax year without affecting your allowance, while Stocks & Shares ISAs may take time to cash out investments and should be seen as medium to longer term investments.
A common rule is to keep 3–6 months’ worth of expenses in an easy-access savings account for emergencies, then invest any additional funds based on your financial goals and risk tolerance.
Working with a qualified financial adviser will enable you to structure your savings and investments to suit your individual circumstances.
Ethical investing involves choosing investments that align with personal values, such as environmental sustainability, social responsibility, and good corporate governance (ESG). Investors can select funds that avoid industries like tobacco, fossil fuels, or arms manufacturing while supporting companies with strong ethical practices.
Fill in the form below to receive our FREE informative Guide to Investing and what it involves, straight to your inbox.
We won’t share your details, check out our Privacy Policy for information about how we use your data.
Thoughts from our clients...
