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Elderly father and son reading the Foresters guide to ISAs

What IS A ISA?

You might be thinking “Should I be investing in the stock market?” and “Is it better to save money with a bank or hide it under the bed?” With different savings options nowadays you may be feeling a little overwhelmed, but don’t worry as our guide to ISAs will help make things clearer.


There are many savings options available these days; whether you want to save for a rainy day, your first home or your child’s future, there is an ISA to suit your needs. Take a look below for more information on the different types of ISAs.



A Lifetime ISA is a savings initiative introduced by the Government in 2017, designed to help save towards your first home or for later on in life.

Lifetime ISAs and Help to Buy ISAs were launched as Government initiatives to help first-time buyers save for their first home. Learn more about their differences >

You can choose whether you would like your Lifetime ISA to be held in Cash or Stocks and Shares, although you can only have one Lifetime ISA each tax year, regardless of whether it is invested in stocks and shares or cash.

You are able to save up to £4,000 each tax year into your Lifetime ISA. This £4,000 counts towards your overall ISA limit of £20,000 for the tax year.

The Lifetime ISA benefits from an additional 25% bonus paid by the Government; that’s £1 for every £4 you contribute, which means that if you start saving from age 18 and continue contributing the maximum amount up to age 50, a further £33,000 would be added from the Government.

A Lifetime ISA may be suitable for you if:

Learn more about the house purchasing process using a Lifetime ISA >

You can transfer your Lifetime ISA to another provider if you wish, however if you want to transfer your Lifetime ISA into a different type of ISA or make a withdrawal for any reason other than a deposit on your first home, or before age 60, then a Government penalty of 25% will be applied to the withdrawn amount.

The Government penalty effectively reclaims the original Government bonus, plus any growth from the bonus money, and also applies a penalty. So you may get back less than you have paid in if this penalty applies to a withdrawal.

If you save into the Lifetime element for later on in life, instead of enrolling in, or contributing to a qualifying scheme, workplace pension or personal pension scheme you could lose the benefit of contributions by an employer to that scheme. Unlike a qualifying pension scheme, workplace pension or personal pension scheme the value of a Lifetime ISA, including the Government bonus, could impact current and future entitlement to means tested benefits, which are affected if the value is over £6,000.

Check out our ISA - it combines a Lifetime and a Stocks and Shares element so that you can have two ISAs in one place.


Help to Buy ISAs

Please note that Help to Buy ISAs are no longer available in the market.

A Help to Buy ISA was an ISA designed for first time buyers to save towards their first house (under the value of £250,000/£450,000 in London), this was only provided as a Cash ISA meaning only some providers allow you to save in a Help to Buy ISA and a Cash ISA in the same tax year.

Help to Buy ISAs and Lifetime ISAs were launched as Government initiatives to help first-time buyers save for their first home. Learn more about their differences >

You can contribute up to £1,200 in the first month of opening your Help to Buy ISA, after that you can save up to £200 a month, which is a maximum of £3,400 each tax year. Once you use these savings for your first home the Government will add a 25% bonus, but only a maximum of £3,000.

You can make withdrawals from your Help to Buy ISA at any time, however bear in mind you can only save £200 each month. So, for example, if you deposit £200 and then withdraw £50 in the same month, you will have to wait until the next calendar month to make another deposit.

Click here for more information on Help to Buy ISAs.


Innovative Finance ISAs

Innovative Finance ISAs allow you to lend money through peer to peer lending, or invest in companies through crowd funding, allowing you to invest up to £20,000 each tax year.

This works by lending your money to borrowers in return for a projected amount of interest based on the length of time the money is untouched for, although there is a scope for greater returns the risk to capital is generally higher.

An Innovative Finance ISA may be suitable for you if:

Please note that Innovative Finance ISAs are not protected by the Financial Services Compensation Scheme. In the event of borrower default or platform failure, lenders capital is entirely at risk.

Click here for more information about Innovative Finance ISAs.


Junior ISAs

Junior ISAs are a saving account for parents to save on behalf of their child. The money invested can be held in cash and/or stocks and shares, meaning you can split your child’s savings if you wish. Find out more about the differences between a Cash and Stocks and Shares Junior ISA >

These savings are tax-free and remain locked away until the child’s 18th birthday. If the child chooses not to access the money then the Junior ISA will automatically convert into an adult ISA.

Parents can save up to £9,000 this tax year; this doesn’t count toward the adult ISA savings limit. Family and friends can contribute too, which can make the perfect gifts for birthdays and special occasions.

A Junior ISA may be suitable for you if:

If you would like to learn more about this tax-efficient children’s savings account, our What IS A Junior ISAs article and dedicated FAQs page can help.

If you have a child born between 1st September 2002 and 2nd January 2011, your child will already have a Child Trust Fund. For more information on Child Trust Funds.

Check out our Junior ISA and start saving from as little as £10 a month.

Choice of funds

At Foresters, we offer two Stakeholder funds and a Shariah compliant fund. To find out more please see our Fund page>