Cash ISAs are savings accounts, but the interest is completely tax-free. They can be ideal if you don’t want to put your savings at risk and may need to withdraw money quickly.
Variable Rate Cash ISAs often let you make unlimited withdrawals, but the interest rate may go down as well as up. With a Fixed Rate Cash ISA, you’ll know exactly what interest you’re going to get, but you will need to lock your money away for a set period, usually one to five years.
You can have a Cash ISA if you’re 16 or over and a UK resident. If you are under 16, a parent or guardian will need to open a Junior Cash ISA for you.
Stocks & Shares ISAs let you put your ISA allowance into a range of investments. The value depends on stock market movements, so it can go down as well as up. But if you’re happy taking a higher risk to your capital to potentially get better returns on your savings they may be an option.
Most people invest in Stocks & Shares ISAs for at least five years to stand a better chance of them performing well. Any returns you achieve are free from both personal income and capital gains tax.
To open a Stocks & Shares ISA you need to be a UK resident aged 18 or over.
These are for young people aged under 18. There are Junior Cash ISAs and Junior Stocks & Shares ISAs, and you don’t always need a parent or guardian to open one for you. As long as you’re a UK resident aged 16 or 17 you can open a Junior ISA on your own. No withdrawals can be made from a Junior ISA until you are 18.
What happens to your fund when you reach 18 will depend on your provider. If you have a Skipton Junior ISA, we’ll contact you before you turn 18 to ask what you’d like to do. Your options include continuing your investment in an easy-access adult Cash ISA, withdrawing your funds or transferring them to a different ISA.
Launched in April 2016, the Innovative Finance ISA enables you to lend money through peer to peer lending platforms in a tax-free manner.
The benefit of such an approach is that the interest rates on offer to peer to peer lenders are greater than those currently available from Cash ISA accounts. However, the risk is also considerably higher, as your capital is not guaranteed.
Just like a Cash ISA, through an Innovative ISA there is no tax to pay on the interest you receive, within the £20,000 annual allowance.
Skipton Building Society does not offer Innovative Finance ISAs.