What is an ISA?

Every year the government gives you a tax-free allowance in the form of an Individual Savings Account (ISA). Find out more about the ISA allowance for 2018/2019.

There are a range of ISAs which include a Cash ISA, a Stocks and Shares ISA, a Lifetime ISA and an Innovative Finance ISA. Nutmeg offers Stocks and Shares ISAs and Lifetime ISAs. An individual can only contribute money to one Stocks and Shares ISA, one Cash ISA, one Lifetime ISA and one Innovative Finance ISA in any tax year.

Cash ISAs

A Cash ISA works like any other savings account. When you save in an ISA, you keep the full amount of interest you earn on your savings pot. Whilst most individuals are able to earn some interest from their savings without paying tax, taxpayers have to pay tax on the interest their savings earn above their allowance.

There are various Cash ISAs available, including instant access accounts, regular savers and fixed-rate deals. You will not be charged to open a cash ISA, but you should shop around to get the best deal.

Stocks and Shares ISAs

A Stocks and Shares ISA allows you to invest your savings in funds, bonds and shares in individual companies. There is often a fee for this type of ISA, and some companies may charge you to change your investments or withdraw money.

Placing your investments in a Stocks and Shares ISA means you will pay no tax on the dividends or interest they earn. If the investments held within your ISA make a profit, you are exempt from capital gains tax. Find out more about the tax benefits of ISAs.

Nutmeg is a discretionary investment manager, which means that we make the investment decisions on your behalf. When you open a Stocks and Shares ISA with us, we use your contributions to invest in anything from equities to corporate bonds, gilts to commodities.

Use our handy ISA calculator to see how much a Stocks and Shares ISA could be worth in years to come

Cash ISAs are better for short-term savings, although with low interest rates and inflation the real value of your money might go down. Stocks and shares ISAs offer the possibility of better returns over the longer term, although, as with all investing, there is a risk that you may lose some money.

Lifetime ISAs

The Lifetime ISA is a new government savings initiative to encourage millennials to save for their first home or retirement – savers receive a 25% government bonus on their contributions, but certain restrictions apply. The Lifetime ISA forms part of the UK government’s family of individual savings accounts (ISAs). Learn more about the Lifetime ISA »

Who can open an ISA?

For a Stocks and Shares ISA:

  • You must be 18 years or older
  • You must be a UK resident for tax purposes
Open an ISA