An Individual Savings Account (ISA) is a savings or investment account that benefits from a tax wrapper, allowing you to save or invest without paying tax on any interest you earn or any profits you make.
ISAs were set up in 1999 to encourage saving and investment and they provide a way of investing up to £20,000 a year (in the 2022/23 tax year) without paying tax on the investments.
There is a cap on how much you can save or invest in an ISA per year, called the ISA allowance. This allowance refreshes each tax year, and if you have not used your allowance by the end of the current tax year - which runs from April 6th to April 5th - you’re not able to carry over any unused allowance. The ISA allowance for 2022/23 is £20,000.
There are 5 main ISA types available and an individual can invest into one of each kind of ISA each tax year.
There are four main types of adult ISA;
- Cash ISA
- Stocks and Shares ISA
- Innovative Finance ISA (IFISA)
- Lifetime ISA
There's also a Junior ISA, which is an ISA account designed for children and young people under the age of 18. The maximum subscription limit for a Junior ISA in the 2022/23 tax year is £9,000.
CARLTON Bonds are an IFISA provider specialising in fixed term property bonds.
Against a backdrop of low interest rates and a volatile stock market, the IFISA can provide an attractive investment opportunity for experienced investors.
With the ability to hold peer-to-peer loans and debt-based securities, IFISA investments have the potential to generate higher rates of return than more traditional investment routes for investors with a greater appetite for risk.
To find out more about making the most of your annual ISA allowance, download our free guide.