Types of investment accounts

ISA (tax-free)

With an ISA, you can save up to £20,000 per tax year, and never have to worry about paying tax (ever!).

This means your money could grow larger over time.You can withdraw money whenever you like (it could take a few days to come through to your bank account), and even re-add it back to your ISA without affecting the £20,000 limit.

Pension (25% bonus)

With a pension, you’ll automatically get a massive 25% bonus from the government on everything you save.We call this a bonus as it’s like free money from the government, which you’ll only get from saving into your pension.

It’s technically called tax relief, and it’s to refund tax you’ve already paid, or will pay, on your income (as pensions are tax-free).

Also, you won’t pay any tax as your money grows.Each tax year, you’ll be able to save up to your yearly income (with a maximum of £60,000 per year).

You won’t be able to access your money until you’re aged 55 (57 from 2028), and you may pay tax when you start withdrawing it (although 25% is typically tax-free) – it depends on your income at the time.

Standard account

You’ll need a standard account in order to save (although if you open them, your savings will be added to your ISA and pension).

You can use this account as a replacement for an ISA within your easy access pot. Or, if you’ve reached your yearly limits on your ISA and pension.

You might have to pay tax when you sell your investments (if you’ve made over £3,000).

Note: the government could change these tax rules in the future, and your overall tax treatment will depend on your individual circumstances.