We are heading into the ISA season. Comment platform Your Money reprises the situation, as investors and savers look to commit cash ahead of the end of the tax year in April.
There are currently six different types of ISA available, falling broadly within the cash or investment arena.
The most suitable will vary, depending on whether you're happy to take on more risk (investing in the stock market), whether you're a first-time buyer, you're saving for children or you're saving for your retirement.
Knowing how many ISAs and which types you can hold or subscribe to in any given tax year can be a challenge.
Our guide explains what you can and can't do with ISAs and how they interact with each other, so you don't fall foul of the rules:
The current annual subscription amount is £20,000 per tax year. You can split the £20,000 allowance between the following ISA products:
Cash ISA – from banks, building societies and some NS&I products
Stocks & Shares ISA – invest in company shares, unit trusts and investment trusts, corporate and government bonds
Innovative Finance ISA (IFISA) – includes peer-to-peer loans or crowdfunding debentures
Lifetime ISA – a property-come-retirement savings hybrid.
However, the maximum amount you can allocate to a Lifetime ISA each tax year is £4,000, meaning you have up to £16,000 to split between the other three types if you wish, or any combination of those.
As an example, you can split your money 50/50 between a cash ISA and a stocks & shares ISA, or you can deposit £10,000 in cash, £5,000 in stocks and £5,000 in an IFISA. Any combination is ok as long as you don't exceed the £20,000 annual ISA allowance.
But which should you choose? See below for detail on the massive difference between cash and P2P yields. Bear in mind, access and security (also explained below) are important factors to consider. All loans on site are eligible to be held in an IFISA. Our current A-rated offering is 11 per cent filled at the time of writing.
Money&Co. Podcast: We asked David Buik of London investment bank, Panmure Gordon, Baroness Susan Kramer, who holds the Treasury brief for the Liberal Democrats in the House of Lords, and Money&Co. CEO, Nicola Horlick, for their views of the financial highlights of 2017 and their predictions for 2018. This podcast of over 25 minutes also focuses on the outlook for small and medium-sized companies, the lifeblood of the UK economy - and of course the borrowers who find funding for growth via our platform.
Peer-to-peer (P2P) lending is about bringing individuals seeking a good return on capital together with businesses seeking funds to grow. The average gross return achieved by lenders is 8.6 per cent (7.6 per cent net). This compares with 1.3 per cent, which is the best return currently available on cash deposit with a bank or building society, according to comparison sites such as Moneyfacts. See also risk factors, at the foot of this page.
In addition to new loan offerings, our secondary loan market, offering existing loans for sale by lenders, is available to registered Money&Co. users.
All loans can be held, tax-free, in an Innovative Finance Individual Savings Account, or Innovative Finance ISA.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment.We write regularly about these three key factors. Here's an earlier article on security, access and yield.
If you haven't made a loan via Money&Co. before, please read the risk warnings and the FAQ section. You may also wish to consult a financial adviser before making an investment. Capital is at risk, once loaned.