ISA
The ISA is post-tax savings account. This means contributions into the account are made by the individual through after-tax earnings. Any withdrawals from the account are made tax free. Current allowance for the 2019/2020 financial year is £20k p.a. the £20k p.a. is total sum over all ISA products including stocks and shares ISAs, LISAs, and cash ISAS.
I currently have three ISA products namely:
- Stocks and Shares ISA
This ISA provides you the opportunity and benefit to invest in the stock market, companies, particular sectors, buy bonds etc. Contributing money into a stocks and shares ISA does not automatically means you are investing; you have to choose funds and allocate money to that fund.
I am keeping my S&S ISA as my secondary retirement savings account and is currently held with Hargreaves Lansdowne but planning on changing to Vanguard. Vanguard UK is currently not app-based as HL is and also provides only their range of funds and stocks. HL on the other hand has products from a wide range of providers inc Legal and General, Fidelity, HSBC, Vanguard etc.
Note that most platforms offering Stocks and Shares ISA charge a platform administration fee.
Apart from your usual high street banks who offer limited products within a stocks and shares ISA, some platforms providing Stocks and Shares ISAs are Wealthify, Nutmeg, HL, Vanguard, Fidelity, etc
- LISA
The LISA was introduced as another means (apart from the HTB ISA) to support first time buyers below the age of 40yrs in purchasing a first home or saving for retirement. You are allowed to save a maximum of £4k a year and obtain a government bonus of £1000 (i.e. 25% of whatever you save).
Withdrawals from a LISA for pensions is set for age 60.
Most fund options available for normal stocks and shares ISA are also available for LISAs.
For some info on house purchase with a LISA or HTB ISA, please refer to my other blog post
The rules stipulate that you can only use the account to buy a house after you have held it for a year. Note, not being sure when I would buy a house, I opened an account with a £1 to get the clock ticking and thanks to a brilliant move by the government, got an opportunity to transfer all my HTB savings in there when it first launched without counting towards my allowance. Currently, any transfers from a HTB ISA count towards your LISA limit for the year. I have received about £5k from the government by using a LISA.
- HTB ISA
I opened this when it first came out, As soon as the LISA was introduced, I also opened one and contributed £1 to get the ball rolling. Note: as I have mentioned earlier, you have to have held the account for a year before buying a house. You can keep saving into the HTB ISA until 30 November 2029. You’ll have until 1 December 2030 to claim the 25% state bonus
