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Lump Sums and ISAs by Matthew Eaton IFA

Lump Sums and ISAs by Matthew Eaton IFA

ISAs explained Matthew Eaton IFA

When investing lump sums different types of risk are mentioned, and your attitude towards risk is assessed. What are the main types of financial risks that Independent Financial Advisers consider when assessing how to advise on lump sums.

What is an ISA?

   What is an ISA, tree on hill.

ISAs (Individual Savings Account) are government approved tax wrappers that allow you to make tax free returns on a number of different investments. The Help-to-Buy ISA and the Lifetime ISA include payments of government bonuses if you meet certain criteria.

Subscription limit

Subscription Limit

ISAs have an annual allowance of £20,000 per year that is free from income and capital gains tax; I have noted below if the subscription amount differs.

Flexible ISAs

Flexible ISAs

Many ISAs are now flexible, allowing you to take out and replace money within the same tax year without affecting your overall ISA allowance. This does not apply to Help to Buy ISAs, Lifetime ISAs and Junior ISAs.

The Different Types of ISA

Different Types of ISA

There are a number of different ISAs designed for different purposes, they include:

Cash ISAs

Cash ISAs allow you to deposit money and earn income tax free interest on the sum. The interest paid tends to be lower than inflation.

Stocks and Shares ISAs

This ISA allows you to invest in equities free of capital gains and income tax.

Junior ISAs

A Junior ISA is for children under the age of 18; they are not allowed to withdraw the money until they are over 18. The annual limit is £4,260. You can save into any mix of cash or stocks and shares, and switch between the two as often as you like.

Help to Buy ISAs

You receive a £50 bonus for every £200 saved to a maximum of £12,000 saved. These are closing in December 2019 to new applicants provided you use it to buy a house.

Lifetime ISAs

If you are aged 18 to 39, you can open a Lifetime ISA and save up to £4,000 tax-free each year up to and including the day before your 50th birthday. The government will pay a 25% bonus on your contributions if you meet certain criteria, up to a maximum of £1,000 a year. The lifetime ISA limit of £4000 counts towards your annual ISA limit.

Innovation Finance ISAs

This ISA is similar to the Stocks and Shares ISA and invests in peer to peer lending or crowdfunding and is not covered by the Financial Services Compensation Services.

If you would like to discuss ISAs and their suitability for your circumstances, please call us or get started today.

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Matthew Eaton standing outside in Spring

Matthew Eaton Independent Financial Adviser

Matthew has 28 years experience in the financial services sector working throughout Somerset from his base in Taunton. Matthew is a keen traveller and his favourite destination to date has been exploring South America. Matthew is an experienced and confident wealth management professional.

Investments come with risks. What are they? is an article by Matthew Eaton Independent Financial Adviser


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