ISAs Explained

What is an ISA?

An ISA or Individual Savings Account is a long-term savings account that allows you to save or invest money free of UK tax. There are four types of ISAs: Cash ISA, Stocks & Shares ISA, Innovative Finance ISA and Lifetime ISA. Beanstalk offers a Stocks & Shares ISA.

What are the benefits of an ISA?

The features of an ISA make it an attractive option for putting money aside for yourself.

Your money will grow tax-free. Any interest or investment income is usually free of income tax and there is no capital gains tax to be paid on increases in value of any investment.

You can contribute up to £20,000 per year. This allowance starts afresh each tax year.

You can have multiple types of ISA. You can also transfer existing ISAs into a new ISA when you open it.

What is a Cash ISA?

Cash ISAs are like a regular bank savings account in that they pay interest (which may vary from time to time) on any savings. Cash ISAs may be fixed term or instant access.

UK Shares 4.7%
Cash 1.1%
Source: Barclays Equity Gilt Study 2019, 50 year average returns

What is a Stocks & Shares ISA?

A Stocks & shares ISA is a wrapper that allows you to use your allowance to invest in things like stocks and shares, bonds or similar. Beanstalk ISAs and JISAs offer a simple choice between two tracker funds (an L&G cash fund and a Fidelity global shares fund). The growth in your savings depends on how well the investments do and there is a risk that you could end up with less than you put in.

Some people choose stocks & shares when saving over longer periods as growth may compensate for the extra risk of the ups and downs. A recent Barclays report, for example, showed that over 50 years, UK shares returned four times more than cash.

How many ISAs can I have?

You are only allowed to contribute to one of each type of ISA per tax year but can spread your allowance between different types. You can transfer so if, for example, you wish to open a Beanstalk ISA but have already contributed to another Stocks & Shares ISA in the year, you need to transfer the existing one across.

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What is the ISA limit?

There is a limit on total contributions that can be made in any individual tax year. Tax years run from 6th April to 5th April of the following year and the allowance for 2021/2022 is £20,000 and was £20,000 in 2020/2021. This was a significant increase from 2016/2017 when it was £15,240.

Can I transfer my ISA?

Yes you can. Transferring is really simple: when you apply for a Beanstalk account, we will ask you if you have an existing account to transfer. We need a few details from you and then we take care of the rest.

Free Junior ISA Guide

Download our free Junior ISA Guide to learn more about the basics of Junior ISAs.

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AS WITH ANY INVESTMENT THE VALUE CAN GO DOWN AS WELL AS UP. PAST PERFORMANCE IS NO INDICATOR OF FUTURE PERFORMANCE. THE TAX TREATMENT OF ISAS DEPENDS ON YOUR INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN THE FUTURE.

Beanstalk is the newest member of the KidStart family. KidStart is the shopping club for parents that has been helping families save for their children for over 10 years and has helped thousands of families save millions for their little ones.