THE ISA FAMILY
- 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 It has now been overshadowed by the Lifetime ISA (see below) and will be withdrawn from 1 December 2019, although existing investors will be able to continue making contributions.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 It provides a government bonus, but comes with penalties if funds are withdrawn before age 60, other than for a first home purchase.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:
- A basic ISA with a stocks and shares component
- 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)
- An Innovative Finance ISA
- A LISA
If an ISA is transferred in full, the one-ISA-per-type-per-year rule still applies.
PASSING IT ON
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