ISAs explained

SJP ISAs explained

ISAs (Individual Savings Accounts) are a straightforward way to save. They’re popular because they’re easy to open, transfer and take money out of when you need to.

Unlike pensions, which you can’t draw from until you’re 55 (rising to 57 in 2028), Cash ISAs and Stocks and Shares ISAs allow you to access your money more freely.

What are ISAs and how do they work?

Whether you’re saving for a short- or a long-term goal, there are different types of ISA to suit your needs.

ISAs have great tax benefits. Whatever you make in interest or capital gains from investments within an ISA is free from Income Tax and Capital Gains Tax.

There’s a cap on how much you can put into your ISA or ISAs in any tax year (from 6 April to 5 April). This is known as the ISA allowance, which in 2024/25 is set at £20,000.

There’s no overall limit to how much you can hold within an ISA. An adviser can let you know if you’re saving enough into your ISA to help reach your goals, give guidance on spreading your allowance across more than one ISA and help you include ISAs in retirement planning.

What are the different types of ISA?

Stocks and Shares ISAs

Stocks and Shares ISAs are a great way to save for mid- to long-term goals.

Also referred to as an Investment ISA, the money you put in can be invested in company shares, bonds, property, or other assets. Because you’re invested in the stock market, your money can potentially grow more than if you received interest from a Cash ISA or savings account. But your overall balance can also fall. As with all ISAs, capital gains are tax-free.

More about Stocks and Shares ISAs

Junior ISAs

Although a parent or legal guardian must open a JISA, friends and family can then save on behalf of under-18s with our flexible, tax-efficient Junior ISA(JISA).

There are two types of JISA; a Junior Cash ISA and a Junior Stocks and Shares ISA. SJP offers the latter. Stocks and Shares JISAs provide a flexible and tax-efficient way to build a capital sum and help secure the financial future of your children.

More on Junior ISAs

Cash ISAs

A Cash ISA is similar to a savings account, except there’s a cap on how much you can pay in annually and gains are tax free.

It involves no stock market investment, so it’s low risk. Inflation can erode the value of cash so Cash ISAs are a sensible choice if you’re saving for a short-term objective. You can convert a Cash ISA into a Stocks and Shares ISA if your goals change.

Innovative Finance ISAs

An Innovative Finance ISA (aka IFISA) is an ISA that contains peer-to-peer loans rather than cash or stocks and shares.

Because you’re lending money to an individual such as a property developer or a business, without involving a third party such as a bank, interest rates can be generous. But IFISAs are considered higher-risk options, so it’s definitely worth talking with a financial adviser first.

Lifetime ISAs

The Lifetime ISA was introduced in 2017 to help individuals 18 or over but under 40 get on the property ladder or save for retirement.

You can invest in either cash or stocks and shares, and the Government adds 25% to any money saved up to a £4,000 annual limit. But here’s the catch. If you withdraw the money for a reason other than buying a house, or before you’re 60, you will be subject to hefty exit fees.

The value of an ISA with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than you invested. An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA.

The favourable tax treatment of ISAs may not be maintained in the future and is subject to changes in legislation.

Be informed: We don’t offer Cash ISAs, Lifetime ISAs, or Innovative Finance ISAs. We would recommend speaking to an adviser to discuss your individual circumstance.