Much like a standard savings account, Cash ISAs enable you to deposit money and gain interest without taxation. Cash ISAs are available in a variety of forms, from fixed-rate interest set-ups to instant access, where you can withdraw money whenever you like.
A newer form of ISA, Innovative Finance ISAs have similarities with Stocks & Shares ISAs, but are designed for use with peer-to-peer lending investments. Peer-to-peer lending is a form of investing where you directly lend money to individuals, businesses or property developers through P2P lending platforms, where the recipient of your loan pays back the borrowed amount with additional interest over a specified period.
A Lifetime ISA provides a 25% government bonus on your savings, up to a maximum of £1,000 a year. With LISAs, you can deposit up to £4,000 a year until you reach the age of 50, which counts as part of your overall ISA annual limit. A LISA differs from other ISAs in that withdrawing from your savings should mainly be used for buying your first home, if you’re aged 60 or over, or are terminally ill with less than 12 months to live. If you withdraw money from your LISA for any other reason, you’ll pay a set withdrawal fee in the form of losing your government bonus on that amount.