What is an ISA?

ISA stands for Individual Savings Account.

There are 5 different types of ISA.

• Cash ISA
• Lifetime ISA (LISA)
• Innovative FInance ISA (IFISA)
• Junior ISA (JISA)
• Stocks and Shares ISA

At Propelle, we offer Stocks and Shares ISAs, so let’s look at those in more detail.

Stocks and Shares ISA

ISAs allow you to invest and build up money and not pay any tax on the returns. You’re only allowed to put a maximum of £20,000 per tax year in all your ISAs combined. The JISA doesn’t count towards that allowance, as it is technically for your child and not yourself.

For example, this means that in a single tax year, you can put £4,000 in your LISA, £10,000 in your Stocks and Shares ISA and £6,000 in your IFISA. That’s a total of £20,000 across all your ISAs. You can also add up to £9,000 in each of your JISAs for each of your children.

How do Stocks and Shares ISAs work?

Each ISA works slightly differently and is held in different ways; sometimes, your money is held in cash, and sometimes, your money is invested in other things (what you can invest in depends on the type of ISA you have).

As the name suggests, Stocks and Shares ISAs are for holding investments in stocks and shares. They can also be invested in bonds and funds.

ISAs can only be opened by people who are UK residents for tax purposes.

At Propelle, you can choose from one of 7 funds to invest in and hold that investment in your ISA account. The funds themselves are made up of stocks and bonds from around the world. 

What are the benefits?

Investing through your ISA means that you won’t have to pay any tax on your investment returns. 

Normally, when investing, any return you make is subject to tax (income tax, dividend tax or capital gains tax). With an ISA, your money can be invested, and regardless of its performance, any return you make will be yours, and you won’t be liable to pay tax. However, it is important to note that tax is subject to personal circumstances and is subject to change. Individuals should consult with a qualified tax advisor to determine the specific tax implications of their ISA investments.

Stocks and Shares ISA rules

For Stocks and Shares ISAs, the main rule is that you can only invest in assets that are eligible for this ISA. Don’t worry; we’ve selected funds that are eligible, so you don’t have to think about this when you choose which fund you want to invest in.

You do need to be mindful of the yearly allowance across your ISAs. If you only invest in ISAs with us, we’ll keep track of this for you, and you can see how much of your allowance you’ve used in your dashboard. If you also invest in ISAs elsewhere, then you’ll need to keep track of this yourself.

You can invest in multiple Stocks and Shares ISAs at any time. (But you still have to stick to the annual limit across all your ISAs).

Your ISA holds investments, and the value of those investments can fluctuate. They may go down or up, so you’re not guaranteed to make a return.

To get a comprehensive overview of related topics, explore our guide on What is a GIA?.