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 two main sorts of ISA — a Cash ISA and a Stocks and Shares ISA. Nutmeg offers only Stocks and Shares ISAs. An individual can only contribute money to one Stocks and Shares ISA and one Cash ISA in each tax year.
A Cash ISA works like any other savings account. With a standard instant access savings account, taxpayers have to pay tax on the interest their savings earn. When you save in an ISA, you keep the full amount of interest you earn on your savings pot.
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.
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.
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 »
For a Stocks and Shares ISA:
Please bear in mind:
A Stocks and Shares ISA may not be right for everyone and tax rules may change in the future. If you are unsure if an ISA is the right choice for you, please seek independent financial advice.