22nd January 2024

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 save or invest 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 JISA for each of your children.

How do Stocks and Shares ISAs work?

Each ISA works slightly differently and is held in different ways, sometimes in cash, sometimes the money is invested.

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

At Propelle, our ISAs are invested in one of 5 funds that you can choose from. The funds themselves are invested in stocks and bonds across the globe.

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 rules are 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.

You also need to be mindful of the yearly allowance across your ISAs.

Finally, you can only invest in one Stocks and Shares ISA per year. If you’ve contributed to a Stocks and Shares ISA in this tax year (5th April 2023 to 6th of April 2024), you can’t open or contribute to another one. You’ll be able to open a new Stocks and Shares ISA in the new tax year or you can transfer your ISA from one provider to another, so you can continue to contribute to your ISA from another platform.

Your ISA will be invested, so that means that the value of your investment can fluctuate. It may go down or up and you’re not guaranteed to make a return.