Financial Insights -
What is the Benefit of an ISA?
What is the Benefit of an ISA?
ISA Benefits
In financial planning, Individual Savings Accounts (ISAs) have long protected savings and investments from taxation. They offer tax-free income and exemptions from Capital Gains Tax, making them a solid choice for savvy savers.

Additionally, as the traditional concept of long-term assets evolves, alternative assets such as casks and fine wine are attracting investors with their unique blend of enjoyment and revenue.

There are four kinds of ISA
Cash ISA

You can open one Cash ISA per year up to £20,000 and you wont pay tax on the interest you gain. You also dont have to declare any interest from an ISA on a tax return. 

Stocks & Shares ISA

Also known as an Investment ISA. The limit is £20,000 (subject to not having exceeded your ISA limit in the current tax year already). The ISA can be used to buy stocks and shares – either ready made units of investments or ones you research and buy yourself. There is no tax of CGT to pay on the money you earn from the Investment ISA. 

There are likely to be fees attached to managing this ISA. 


Innovative Finance ISA. This allows the IFISA holder to invest directly into peer-to-peer lending to borrowers or a business. The borrower pays back the capital amount, plus interest on top, which is tax freeThe limit is also £20,000.


Lifetime ISA. This is exclusively available to individuals aged 18-40 and is only for the purpose of buying a home or later life saving. Eligible people can add up to £4,000 of their allowance each year until they are 50 and get a 25% boost to their investment, up to £1000 per year. You can take your savings out of a LISA at 60 but if you withdraw or transfer to another type of ISA before then, there is a 25% charge. 

Savings and Investments in the UK

You can hold a combination of the above but only to the combined total value of £20,000. So, if you held a LISA (at £4,000) you would only be able to invest the remaining £16,000 in the other types.  

Cash ISAs are linked to bank interest rates so, until recently, they were performing poorly as interest rates were very low. Great for borrowers, not so attractive for savers.   

Investment ISAs are dependent on whatever stocks and shares you have used the allowance to invest in but, if they are doing well, so do the returns. 

With tax allowances being slashed by Chancellor, Jeremy Hunt and due to be reduced further, ISAs go some way to mitigating the reductions as the interest or dividend is tax free. 

Points to Consider

You cannot carry forward any unused annual allowance, or transfer the allowance to another person. Neither can you transfer the ISA itself – hence the ‘Individual Savings Account’.  

However, upon the death of a holder, the amount saved in the ISA can be transferred to a spouse or civil partner, and they will retain the tax benefit of the ISA. In the case of inheritance tax, an ISA would form part of the estate and would be subject to inheritance tax.  

ISAs are considered long term investments with a minimum recommended period of five years. As they are linked either to interest rates or the stock market, they can be slow or unpredictable to offer returns. 

Or Alternatively...

At Whisky Partners, some of our members have chosen to diversify and invest in casks and fine wine. The whisky market is currently returning profits that are higher than a normal cash ISA and is predicted to carry on growing.  

Like an ISA, there is no CGT to pay when the spirit is sold as it’s classed as a wasting asset. With some record sales of casks being sold at auction, cask investment can deliver impressive gains.  

We offer a personal portfolio manager to all our members, but we do suggest that everyone takes independent advice on their individual circumstances.  

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