From ISAs to LISAs, tax wrappers can sound like jargon but when you break them down, it’s easy to see how much they can benefit your savings and investments. With some serious tax benefits, tax wrapper accounts could help you achieve your financial goals faster. 🚀


What are tax wrappers?

Tax wrappers are tax breaks that the UK government gives you to ‘wrap’ around your savings and investments. They effectively shield your money from taxes that you’d otherwise have to pay on your interest or investment returns. It’s an attractive way to save and invest because you get to keep all of your gains – the government won’t take a slice. 🎁


How do tax wrappers work for investments?

Tax wrappers work for investments by letting you invest your money in a tax-efficient way – which conventional forms of investing like buying shares outright don’t offer. Which tax wrapper you choose will depend on your personal circumstances and your individual investment goals.

If you’re looking to grow your money over the long term and gain exposure to the stock market, you might want to go for a Stocks & Shares ISA. But, if you’re looking to save for your first home, you could opt for a Lifetime ISA.


What are the different types of tax wrappers?

There are two main types of tax wrappers: ISAs and pensions.



ISAs – short for individual savings accounts – are a tax-free way to grow your money. That’s because you won’t pay any tax on the interest, dividends or capital gains of your savings or investments. You can open one type of ISA per tax year and deposit up to £20,000 each tax year in total across all of your ISA accounts. 💰

There are different types of ISA and each is well-suited to a specific saving or investing goal:

  • Stocks & Shares ISA 📈 – deposit up to £20,000 per year to invest in the stock market. You won’t pay any tax on your profits, which is a considerable benefit when compared to other investment options like buying shares outright. 
  • Cash ISA 💰 – deposit up to £20,000 per year in a tax-free cash ISA, which is essentially an interest-paying savings account.
  • Stocks & Shares Lifetime ISA (LISA) 🏠 – invest up to £4,000 per tax year into the stock market to use towards your first house purchase (up to the value of £450,000). You’ll receive a 25% bonus from the government on all investments (up to £1,000 per year). Note there is a withdrawal penalty if the money is not used towards your first home or retirement, or if you withdraw for a house purchase when your account has been open for less than 12 months.
  • Cash Lifetime ISA (LISA) 🏠 –  this is another LISA, so again it’s for people that are looking to buy their first home with the same yearly allowance, government bonus and possible withdrawal penalty as the Stocks & Shares LISA. You won’t be investing your money into the stock market, instead a Cash LISA is effectively an interest-paying savings account. So you’ll receive an additional interest rate (on top of your govt bonus) that’s paid out to you by your chosen LISA provider. 
  • Junior ISA (JISA) 👶 – deposit up to £9,000 per year to save for your child’s future. A Junior ISA (JISA or child ISA) is a tax-free savings and investment account for children under the age of 18. It’s opened and managed by a parent or guardian but only the child can access the money – which is available to withdraw when they turn 18.



With Moneybox, you can save and invest for your future with a Stocks & Shares ISA, Cash LISA, Stocks & Shares LISA, or for your child’s future with a JISA.



Pensions are used to save for retirement, and the sooner you start paying into your pension, the better off you might be when you come to retire. 🏝️ In addition to the state pension, there are two main types of pensions in the UK – workplace pensions and personal pensions – and you can contribute to these alongside your ISAs. 

  • Workplace pension: if you are employed, you will be auto-enrolled into a workplace pension which both you and your employer pay into, so you’re essentially getting free money from your employer towards your retirement. 
  • Personal pension: a pension that you’ve arranged yourself where the money that you contribute is invested into the stock market by a pension provider, like Moneybox. An example of a personal pension is a self-invested personal pension (SIPP).

Learn more about pensions with our Pension Academy



Question one: Which of the following would count as a tax wrapper? 

  • Stocks & Shares ISA
  • FTSE 100 tracker fund
  • Buying stocks outright  

Question two: Which two of the following are a type of pension?

  • Workplace pension
  • Single saver pension 
  • Personal pension

Question three: Which one of these taxes won’t you pay if you use a tax wrapper like a Stocks & Shares ISA? 

  • Capital gains
  • Inheritance tax
  • Corporation tax 


You’ll find the answers to the quiz below. 


🎓 You’re on a roll! In Lesson 7 you’ll learn about the magic of compounding and how you can grow your investments over time without lifting a finger.  

Go to Lesson 7






Quiz answers

Question one: Stocks & Shares ISA

Question two: Workplace pension and personal pension 

Question three: Capital gains 


All investing should be regarded as long term (minimum five years) and historic performance isn’t a guarantee of future returns. The value of your investments can go up and down, and you may get back less than you invest. Tax treatment depends on individual circumstances and is subject to change. We don’t provide investing advice, and investors should make their own investment decisions or contact an independent adviser.