A new tax year is almost upon us, which can mean only one thing – you'll soon have a brand new ISA allowance! This year you'll have more to play with, too, as from 6 April 2017, the annual limit will rise to £20,000, giving you plenty of opportunity to boost your tax-efficiency in the 2017/18 tax year.
Find the best home for your 2017/18 ISA allowance
You've still got until midnight tomorrow to get your 2016/17 ISA contribution finalised, but if you've already maxed out your allowance for the year, it's time to start thinking about the next one. Finding the best ISA rates will of course be a top priority, and our Best Buys will be a great place to start – the best fixed rate cash ISA, for example, comes from Principality Building Society and pays 1.95%, or if you're after the best instant access ISA, you can't go wrong with Coventry Building Society's 1.05% deal.
But what other options do you have?
More money, more options
The days of there only being a cash and stocks & shares ISA are long gone – now you've got everything from an innovative finance ISA to a Help to Buy ISA, and even the new kid on the block, the Lifetime ISA (LISA for short). This means you've got plenty of ways to make your money work hard for you, with numerous options to split your £20,000 ISA limit between.
- Cash ISA. The traditional and arguably simplest of all the ISAs, the cash ISA could be a great home for your money if you want zero risk and the promise of guaranteed returns. Cash ISA rates have seen some improvement recently, too, particularly long-term fixed rates, with our charts highlighting the best ISAs in the market.
- Stocks & shares ISA. Otherwise known as an investment ISA, a stocks & shares ISA lets you invest your funds in the stock market, rather than keeping it in cash. This means there's the potential for higher returns, but also the chance you may end up with less than you put in, so it should only be considered by those comfortable with extra risk. However, stocks & shares ISA funds have enjoyed stellar performance recently, so this form of investing could be worth considering.
- Innovative finance ISA. Introduced in April 2016, the innovative finance ISA lets money saved through peer-to-peer lending platforms count towards your annual ISA allowance, allowing you to receive tax-free interest and capital gains on funds lent out. Again, this is a riskier form of investing that has the potential for higher returns, so should only be considered by those who are happy to put their money at risk.
- Help to Buy ISA. Specifically designed for those saving for a first home, a Help to Buy ISA has slightly different investment limits: it lets you invest a lump sum of up to £1,200 and save up to £200 per month thereafter, and when you buy your first home, the Government will give you a 25% top up.
- Lifetime ISA. The LISA will be launched on Thursday and is a first home/pension saving hybrid – you can use it to save up to £4,000 a year for a first home or retirement, and similar to the Help to Buy ISA, will get a 25% Government bonus. However, it can only be opened by those aged between 18 and 39, and there are restrictions on how you can use it (you can withdraw the money for a first home at any time, but otherwise you'll have to leave it untouched until you're 60, unless you want to pay a penalty), but for those who meet the criteria, it could prove to be a great way to save for the future.
What next?
Use our search tool to compare ISA rates, or head straight to our cash ISA Best Buys to find the top ISA rates available
Want to invest as part of your ISA allowance? Read our guide on stocks & shares ISAs
to find out more, and check out our investment ISA page for details of some of the options available
Saving for a first home? Find out more about the Help to Buy ISA, and stay tuned for more details of the LISA
