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When you’re starting out on your investing journey with Chip, the first decision you’ll need to make is choosing the right investment account for you.

We offer a Stocks & Shares ISA (SSISA) or General Investment Account (GIA), both of which are here for your long-term wealth building needs. 

We’re bringing you this simple guide to choosing which account is right for you, so you don’t need to get bogged down in all the research. We all want to make our money go further, and choosing the right account can make a big difference in reaching those long-term goals.

What is a Stocks & Shares ISA?

A Stocks & Shares ISA is your tax-efficient friend when it comes to any gains you might make on your investments. 

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Why choose a Stocks & Shares ISA?

Unlike the General Investment Account, any returns on your portfolio within your SSISA remain free from income tax. This is often referred to as a ‘tax wrapper’ on your ISA. 

You also won’t owe any capital gains tax if you decide to sell your investments at a higher price than you bought them or any tax on dividends you earn.

Previously, ISA customers could only hold one of each ISA type, however, as of April 2024, you can open multiple ISA’s of the same type. 

If you hold multiple accounts, and are looking to bring all of these accounts to one place with Chip, ISA transfer allows you to move one ISA to another without it affecting your allowance.

Another added benefit to a Chip Stocks & Shares ISA, is it’s flexible — you can withdraw and redeposit funds from your ISA without it affecting your annual ISA allowance of £20,000. 

For example, if you deposited £10,000 into your SSISA in May, and then needed to make a withdrawal of £1000 on June; once you redeposit the £1000 in July, you would still only have used £10,000 of your ISA allowance (tax year runs from April 6 to April 5 the following year). 

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What are the drawbacks?

You are currently limited to invest or save £20,000 per year across all your ISA’s. So, you’ll need to make sure you keep track of all your ISA’s between platforms. In the Chip app, it’s easy to view your ISA allowance with us in the ‘Profile’ tab. 

It’s also worth remembering that having multiple SSISA’s could come with paying a variety of fees, which may work out greater than holding all your SSISAs in one place. 

What is a General Investment Account?

A General Investment Account (GIA) is the standard option for investing as much as you like, without the ‘tax wrapper’ of the Stocks & Shares ISA. 

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Why choose a GIA?

With a GIA, you aren’t restricted to the £20,000 investment per tax year that the SSISA is. You can take advantage of unlimited deposits and withdrawals, without worrying about what you might have invested elsewhere. 

This gives you the freedom to open multiple GIAs and deposit as much as you like to take advantage of the best rates. For example, with a Chip X subscription, you can take advantage of 0% platform fees which can save you thousands over time as your portfolio grows. 

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What are the drawbacks? 

With a GIA, investors are liable to be taxed on their investments. If your investments have grown in value, you may owe Capital Gains Tax (CGT) on these gains. However, every tax year you get an ‘Annual Exempt Amount’. 

For the 2024/2025 tax year this is £3000, so anything above this amount is taxed at 18% for basic rate taxpayers, and 24% for higher rate and additional taxpayers. 

You are also liable to be taxed on any dividends you receive from income funds that pay out on your gains. Similar to the CGT rules, you are given an allowance per tax year, which for 2024/2025 is £500.

Beyond this the tax rate is 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers, and 39.35% for additional rate taxpayers.   

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Choose one or both accounts with Chip

Here’s the best part — you can have both! If you’ve got some leftover cash but you’ve used up your ISA allowance, you can open a GIA with no implications on your ISA. If you already have a cash ISA, but have some remaining ISA allowance, consider a Stocks & Shares ISA.

No matter which account you choose, Chip is here to ensure you can build your investments with confidence and trust. Whether you're new to investing, or you’re looking to move existing investments, Chip is here for every step towards achieving your long-term financial goals.

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