Unlike other savings or investment accounts, ISAs offer great tax incentives. They are also flexible, so you can find the right fit for your unique situation.

In this article, we’re uncovering five characteristics of ISA to help you on your journey. This should help you to reach your goals, while staying within the rules.

While this article is intended to be helpful, it is not advice. Please be aware that with investing comes risk, and there is a chance that you may get back less than you put in. If you’re unsure, consider financial advice.

1. You can save or invest up to £20,000 each tax year

Annually you can deposit up to £20,000 into an ISA. This money will benefit from some serious perks, such as no tax to pay on any income. Plus, no capital gains tax on investments.

But if you don’t use it, you lose it. The £20,000 allowance resets every tax year and any unused allowance will not be carried over.

2. You can have more than one ISA

Whatever your motivation is for opening an ISA, you can have more than one type of ISA and can split your £20,000 allowance across several. Triodos Bank offers a Stocks and Shares ISA, Cash ISA, and an Innovative Finance ISA. The best part is that you can mix and match to create a tax-efficient solution that’s best for you.

Thanks to new rules which came in on 6 April 2024, you can now pay into several ISAs of the same type in the same tax year. For example, you could pay some of your ISA allowance into a cash ISA with one bank, and the rest into a cash ISA with a completely different bank. Just so long as you don’t go over your £20,000 allowance.

3. Despite the name, you can save and/or invest with an ISA

The name (Individual Savings Account) often causes confusion as it implies it’s purely a way of saving money, but it isn’t. It also applies to investment ISAs and Triodos Bank has two on offer – Stocks and Shares ISA and Innovative Finance ISA. These enable customers to invest either globally through impact investment funds or locally through the crowdfunding platform.

4. You can transfer some ISAs

If you have a Stocks and Shares ISA or a Cash ISA already, it’s straightforward to switch over to Triodos – simply open your new ISA and complete a transfer form. This will ensure you retain the tax benefits of your transferred ISA. If you try to withdraw the money yourself, you may have to pay tax, and you’ll lose the ISA status.

5. ISAs can reflect your values

Your money is powerful, and what you do with it matters. Most ISAs invest in fossil fuels, and companies responsible for plastic pollution, or degrading work conditions. But it doesn’t have to be that way. If you want to help reduce carbon emissions, restore the environment and protect workers, you can invest in sustainable companies. It’s a simple way to make the world a better place.

If your current ISA provider isn’t putting the planet first you might be ready to start again with an ethical ISA