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The Best ISAs For The 2024-2025 Tax Year

By June 5, 2024No Comments

Are you making the most of your money?

If you’ve got money languishing in a current account you’ll be earning next-to-no interest. An ISA is a great way to make sure your money is working for you, but what options are available to you for the 2024/25 tax year?

What is an ISA?

An ISA, or Individual Savings Account, is a tax-free savings account available to all UK adults aged 18 and over (there’s a specific ISA available for children which we’ll explain later in this blog post).

There are six different types of ISA and each one has an annual deposit limit that is reset at the start of each new tax year. Note that any unused allowance does not roll over into the next tax year.

What are the different types of ISA available?

There are five different types of ISA that you might already be aware of, with a new type of ISA launched by the Chancellor in the spring budget. Let’s take a look at all six of them in detail.

The UK ISA – new for 2024/25

The new UK ISA, also dubbed the ‘British ISA’, was announced by Chancellor Jeremy Hunt at the spring budget in March.

The UK ISA will allow for an additional £5,000 tax-free savings allowance, on top of the existing £20,000 allowance across other ISAs. Via the new ISA, UK consumers will be able to invest the £5,000 allowance into British businesses, including stocks and debt.

The launch of the UK ISA is intended to encourage investment in UK businesses from individual investors and drive growth in the UK economy, but there is an ongoing consultation until 6th June when the precise details of the savings scheme will become more clear.

Cash ISA

A cash ISA offers a way to earn interest on your savings, tax-free, up to £20,000 per year. What’s more, any interest earned doesn’t count towards your personal savings allowance—the total amount of interest you can earn each year across all of your bank accounts without paying tax.

There are three active varieties of cash ISAs available to you for the 2024/25 tax year:

  • Easy-access cash ISAs that offer lower interest rates, but that you can deposit and withdraw from when you need to.
  • Notice cash ISAs that allow you to withdraw as needed, but after providing a certain number of days notice.
  • Fixed-rate cash ISAs, sometimes referred to as fixed-rate bonds, that offer the highest interest rates but don’t allow you to withdraw your funds without incurring an interest penalty.

Help to Buy ISAs, designed to help first-time home buyers with a 25% bonus on savings up to £12,000 over five years, are no longer available to new applicants.

Stocks & Shares ISA

Your ISA allowance can also be used with stocks and shares ISAs. These ISAs offer the opportunity to generate higher interest rates but, unlike cash ISAs, your returns aren’t guaranteed—it’s possible that you’ll even lose money.

Stocks and shares ISAs allow you to invest in funds (shares or bonds from multiple companies grouped together), bonds (a loan to a company or government) and individual company shares. Note that investing in a stocks and shares ISA should be seen as a longer term investment.

Unlike cash ISAs, there are also some fees associated with stocks and shares ISAs, including:

  • A platform charge, either in the form of a flat fee or percentage of the value of your funds.
  • An annual management charge which is always a percentage of your investment, typically ranging from between 0.1% to 1%+ per fund.
  • Trading fees, levied whenever you buy or sell shares or funds.
  • Transfer out fees if you choose to move your stocks and shares ISA from one platform to another (not all platforms charge this).

Lifetime ISA

Launched as a replacement for the Help to Buy ISA in 2017, Lifetime ISAs (LISAs) can be used to help people save for their first home, or their retirement.

However, unlike cash and stocks and shares ISAs, the annual limit for LISAs is just £4,000, while they are also restricted to people aged 18-39. People with a LISA can continue to pay into it until they turn 50.

Although the savings limit is much less, the benefit of a LISA is that the state will add a 25% bonus each month you’ve saved something. This means the maximum bonus available each year is £1,000 for a £4,000 investment. Note that any money saved in a LISA will be deducted from your £20,000 annual allowance.

There are two types of LISAs available to you: Cash Lifetime ISAs and Stocks and Shares Lifetime ISAs.

Innovation Finance ISAs

Innovation Finance ISAs (IFISAs), also known as peer-to-peer lending, is when you lend money to borrowers or businesses. You’ll receive tax-free interest on the money you lend, but you might lose money if the people you’ve lent to can’t repay. The risks of this can be mitigated by spreading your lending across multiple companies, while some peer-to-peer lending providers offer safeguard funds, but there are no guaranteed returns with an IFISA.

It can also take a while to get your money back if you want to withdraw it, as you often need to wait for other investors to buy you out of your loan. This is much easier when the economy is strong, but events like recessions and the pandemic can make it difficult to withdraw money quickly.

Junior ISA

Designed for children up to the age of 17, a junior ISA (JISA) offers tax-free savings on behalf of a child. The annual limit on a JISA is just £9,000, but this doesn’t come out of your own £20,000 allowance, which means you can save £20,000 in your ISA and £9,000 in a JISA in a single tax year.

The account is in your child’s name but is opened and managed by you. When the child turns 16 they can take over management of the JISA, but they won’t be able to touch the money saved until they turn 18.


Here at Warr & Co, we’re specialists in helping individuals, families and businesses make the most of their money. To find out how we can help you with a wide range of accounting services, get in touch with our expert team today. Alternatively, click here to book your free, no obligation consultation.

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