The Five Main Types of ISAs


  1. The Basic ISA 6 – April 1999

The original ISA has two investment components: stocks and shares or cash. These are now interchangeable, so you can transfer from a stocks and shares ISA to a cash ISA, or vice versa. 

Available from age 18 (16 and 17-year-olds may start one but only choose the cash component.)

2. The Junior ISA (JISA) – November 2011

Available to children under 18 who do not already have a Child Trust Fund (CTF) account. Both cash and stocks and shares variants are available.

Available from ages less than 18. Investors cannot also have a Child Trust Fund (CTF). JISAs are available to any child born before 1 September 2002, after 2 January 2011, or born between those dates and whose CTF funds have been transferred into a JISA.

3. The Help to Buy ISA – Dec 2015

In practice this is a variant of a cash component basic ISA. Aimed at first-time buyers, its main benefits revolve around home purchase. It has now been overshadowed by the Lifetime ISA (see below) and will be withdrawn from 1 December 2019, although existing investors will be able to continue making contributions.

Available from age 16 and over. No new plans can be started after 30 November 2019. Help to Buy bonus must be claimed by 1 December 2030.

4. The Innovative Finance ISA – April 201

These relatively new ISAs are limited to investments in cash and two specialist, higher risk lending areas (peer-to-peer loans and ‘crowdfunding debentures’).

Available from age 18 and over.

5. The Lifetime ISAs (LISA) – Apr 201

The LISA is aimed at encouraging saving for first home purchase or retirement by adults under the age of 40. It provides a government bonus, but comes with penalties if funds are withdrawn before age 60, other than for a first home purchase. To date few providers have chosen to offer LISAs.

Available from age 18 to 39. Contributions cannot be made after age 50.


The maximum overall investment across all ISAs in 2019/20 is £20,000

There are sub-limits for Help to Buy ISAs and LISAs:

 1. The maximum Help to Buy subscription is an initial £1,000, plus £200 a month for the duration of the tax year in which it was opened.

2. For LISAs the maximum subscription is £4,000 in each tax year.

3. For JISAs, the maximum contribution is £4,368 in 2019/20. In addition, a 16- or 17-year-old can subscribe £20,000 to a cash component basic ISA (including a Help to Buy ISA)

 Subscribers may only open one of each type of ISA in any one tax year. This means in 2019/20, subject to eligibility:

  1. A basic ISA with a stocks and shares component
  2. A basic ISA with a cash component or a Help to Buy ISA (a small number of providers incorporate both types within the one ISA wrapper)
  3. An Innovative Finance ISA
  4. A LISA

If an ISA is transferred in full, the one-ISA-per-type-per-year rule still applies.


ISA rules were amended in 2014 to allow the value of any ISA to be inherited and used as an ‘additional permitted subscription’ (APS) by a surviving spouse or civil partner.

Since April 2018, generally the ISA tax benefits remain during the administration period and all investments, plus any subsequent growth or return, form part of the APS.

So the ISA’s tax advantages can outlive the original ISA owner, with their ISA holdings and tax benefits normally being transferable in full to the survivor.

If you would like any further information about ISAs please give us a call

The European Election

This may be of no interest if, as expected, we leave the EU. But on the off chance we don’t…

The European election is a curious double election going on at the same time. Voters get to vote for parties, to decide how many MEPs of each party get in from each member state. The parties are numerous and diverse with many of them rooted in the national politics of the country concerned. The parties propose a list of named candidates and the order of their possible election. It is a proportional system where the more votes a party gains the more candidates it gets elected.

Simultaneously, so-called Spitzenkadidaten hold debates for the powerful post of President of the Commission. These candidates represent various Europe wide alliances of parties participating in the election proper. At this level, the election is fought between Europe wide coalitions of parties. The traditional groups of the EPP (Christian Democrat style centre right parties) and the PES, European Socialists (Social Democrat parties) now fight it out against European Greens, European Liberals (ALDE), the Alliance of Conservatives and Reformists (ACRE), the European Left and various other parties not part of those six groupings. Voters do not get a vote on the post of President.

The candidates for the powerful post of President of the Commission are battling for the right to fashion an EU agenda and to propose and write the legislation the EU will undertake. The Commission has sole right to propose laws. It runs the budgets and represents the EU internationally. After the Parliamentary election, the member states will work out who to propose to the Parliament as Commission President. It does not have to be one of the Spitzenkadidaten, but it does have to be someone who can command a majority in the 751 seat Parliament. The European Council, the meeting of member states governments, is charged by Treaty to “take into account” the results of the Parliamentary election (Treaty Article 17.7) and to create a qualified majority of votes around the Council table for a Presidential nominee to put to the Parliament. The Parliament has to approve by simple majority.

The events that follow the election include the appointment of an entire new Commission with roles for each Commissioner, and the fashion of any policy changes that the new Commission and Parliament may wish. Commissioners are proposed by member states governments, but the newly elected President of the Commission will have views on their suitability and the Parliament has to approve the Commission as a whole. There is intense lobbying over which roles any given Commissioner may receive as well as over the actual names in some cases that states recommend.

Given the likely balance of forces in the new Parliament, there remains a considerable force for business as usual, with a larger and noisier Parliamentary opposition to what is going on.

The populists may agree that they want some fiscal relaxation by the EU, though Germany’s AFD is unlikely to support that. They might agree they want more power returned to member states, and more action taken on the EU’s common external borders over migration and security. The new Commission will need to make difficult decisions about how serious the challenge to the EU plan now is and whether they need to be more accommodating than the outgoing government. There is likely to be much noise and argument before a new President and Commission is agreed and a new programme of work announced. This could be a little unsettling for markets. Thereafter, there may be more of a debate over whether some change of fiscal stance is needed and whether there can be the moves towards a Euro area larger budget with more transfers of money as some would like.

With thanks to Charles Stanley & Co. Limited who are one of the oldest firms on the London Stock Exchange. Its origins lie in a banking partnership established in Sheffield in January 1792.

A Word of Warning

Just a word of warning to all my readers. The Financial Conduct Authority has warned about high-risk innovative finance Isas (Ifisas) being advertised alongside cash ISAs. 

In a statement published on its website the regulator confirmed it had seen evidence the two products were being promoted together, and it warned  investments held in Ifisas were “high-risk”, with the money ultimately being invested in products such as mini-bonds or peer-to-peer investments.

The City watchdog warned these types of investments might not be covered by the Financial Services Compensation Scheme and investors might therefore struggle to reclaim any money lost. 

The FCA warned: “Anyone considering investing in an Ifisa should carefully consider where their money is being invested before purchasing an Ifisa.” 

Innovative finance Isas were introduced by former chancellor George Osborne in his 2015 Summer Budget to help investment in small businesses and to allow investors to hold P2P assets in a tax-free wrapper.

But they have not taken off in the same way as the lifetime Isa, which Mr Osborne announced in 2016 to help younger savers put money aside for a house deposit and retirement.

During 2017/18 only 31,000 Ifisas were subscribed to, compared to 166,000 Lisas, 2.8m stocks and shares Isas and 7.8m cash Isas.

Earlier this year mini-bond provider London Capital & Finance collapsed putting the funds of more than 14,000 bondholders at risk.

Because mini-bonds are unregulated investments the FSCS confirmed it would not accept any claims from LCF investors, with the company’s administrators instead hoping to recover funds on behalf of those affected. 

In the most recent update from administrators Smith & Williamson, they estimated bondholders would see as little as 20% of their investments returned to them. An investigation into LCF by the Serious Fraud Office remains ongoing. 

If you have any doubts or concerns, give us a ring and we’ll be pleased to have a chat with you.

How Important will Next Week Be?

As readers will undoubtedly know, it’s all set up to be a very important week in parliament this week with Theresa May’s next meaningful vote scheduled for tomorrow – and subsequent votes on Wednesday and Thursday depending on the outcomes.

All that uncertainty means that there are still a number of different possible outcomes for the UK despite the fact that we’re due to leave the EU on the 29th of March. No news there though, but what might this mean for investors? Bravely – some might even say foolishly – The Sunday Telegraph Money has been trying to work out what might be hot and what’s not when it comes to investment, getting tips from different experts on which investments might do well in different scenarios  such as a softer Brexit, no deal, revoke article 50 etc.

It’s not all negative of course, it’s just a matter of looking for which businesses and approaches might do better under different circumstances. As professional advisers will advocate to clients, investment is a long term process.

However dramatic the short term political, economic and market considerations may be, we need to remember the considerable benefits and value of long term investment and the risk of trying to predict short term movements.

I’m happy to say that the investments we arrange for our clients have been and are all based on a diversified global portfolio, intended to provide growth or income over the medium to long term.

China – a Growing Economy

Ian Cowie, writing his usual Personal Account column in the Sunday Times Money section, has China in his investment sights last weekend. He reminds readers of the value of investing internationally and how China’s growing economy has significant potential despite worries over a trade war. As recent events seem to have increased hopes that such a trade war between the US and China can be averted, Chinese stocks have rallied. Indeed, they’ve had an excellent start to the year. Cowie concludes by saying that “no matter what happens with Brexit, the sun will continue to rise in the east, and so will some economic opportunities”.  

What was pleasing to me about what I saw was that the Portfolios we at ABFM use are generally speaking all Global portfolios and therefore have or potentially have China in their make up.

Fourth Quarter Review of SEI’s Strategic Portfolios

I thought you might be interested to read about one of our Investment House’s views on the Fourth Quarter of last year and their views on the Economic Outlook.  We use SEI, as an Investment House, quite often and they have a good track record.  They say:

Market overview

An enthusiastic start to 2018 for global stock markets quickly faded as anxiety over the pace of rate hikes from the US Federal Reserve triggered a sharp rise in bond yields and was a key driver for an early year equity market correction across major markets. Amidst the uncertainty of trade wars, geopolitical uncertainty, particularly across Europe, and a stronger US dollar, US equities led the rest of the world for the most part, with impressive gains in particular coming from mega-cap technology stocks. Intense bouts of risk aversion in October and December resulted in one of the worst quarters for global stock markets since 2011, pulling most risk assets into negative territory for 2018. Fears of a near term recession on the back of quantitative tightening in the US, disappointing economic data out of Europe, a weaker Chinese economy and geopolitical risks such as Brexit, Italy and the ongoing trade conflict between the US and China weighted heavily on market sentiment. The end result was a return of -10.3% for UK equity markets, as measured by the FTSE UK All Share Index, taking the 1-year return to -9.5%. Government bonds were again the beneficiaries of increased risk aversion, with global bond yields compressing over the final quarter. The UK government bond market, as measured by the BofAML UK Gilt All Stock Index, rose 1.9% over the quarter although only ended the year up 0.5%. Non-government debt underperformed, particularly in the high yield market where the energy sector reacted negatively to the sharp drop in the oil price. Falling energy prices were also a major driver behind the poor showing from commodities over both the quarter and year, with the broad Bloomberg Commodities index down 11.2% for 2018.

Portfolio positioning

The stability-focused funds delivered returns of between -0.8% and -3.6% for the fourth quarter, taking the 2018 performance to between -1.4% and -3.1%. The use of Global Managed Volatility within the equity components of these strategies provided a degree of protection against the worst of the equity market falls, but that, in combination with only marginally positive returns fixed income strategies, were insufficient to offset the sharp falls seen in equity markets. The growth-focused funds delivered returns of between -6.1% and -11.9% for the final quarter, bringing their calendar year performance to -5.6% and -9.2%. The poor performance of equity markets across the board dominated the funds’ overall outcomes for both the quarter and the year. Our funds have also strongly favoured Value, and to a lesser degree Momentum, over the course of the year and both styles were challenged in the recent risk-off investment climate. During the quarter, we undertook a number of changes, mostly in relation to the underlying investment managers utilised in the strategies.

Economic outlook

The severity of the recent declines in equities can certainly prey on investors’ emotions. Yet we expect to see continued global economic expansion in 2019, albeit at a moderating pace, and regard valuations across most markets as more attractive. The sheer ferocity of the recent correction is reminiscent of other times in the past eight years when risk assets sold down hard, only to turn around and hit new highs. As painful as the past three months and the past year has been for risk assets, the gyrations experienced have not been outside the norm. Rather, given our views that the global economy will continue to grow and that market participants are overreacting to the concerns of the day, we see another important risk-on opportunity developing in equities and other risk assets.