There are 4 types of Individual Savings Accounts (ISA):
- cash ISA
- stocks and shares ISA
- innovative finance ISA
- Lifetime ISA
You do not pay tax on:
- interest on cash in an ISA
- income or capital gains from investments in an ISA
If you complete a tax return, you do not need to declare any ISA interest, income or capital gains on it.
Putting money into an ISA
Every tax year you can save up to £20,000 in one account or split the allowance across multiple accounts. The tax year runs from 6 April to 5 April.
You can only pay into one Lifetime ISA in a tax year. The maximum you can pay in is £4,000.
Example
You could save £15,000 in a cash ISA, £2,000 in a stocks and shares ISA and £3,000 in an innovative finance ISA in one tax year.
Example
You could save £11,000 in a cash ISA, £2,000 in a stocks and shares ISA, £3,000 in an innovative finance ISA and £4,000 in a Lifetime ISA in one tax year.
Example
You could save £10,000 in one cash ISA, £3,000 in another cash ISA and £7,000 in a stocks and shares ISA in one tax year.
Your ISAs will not close when the tax year finishes. You’ll keep your savings on a tax-free basis for as long as you keep the money in your ISA accounts.
What you can include in your ISAs
Cash ISAs can include:
Stocks and shares ISAs can include:
- shares in companies
- unit trusts and investment funds
- corporate bonds
- government bonds
You cannot transfer any non-ISA shares you already own into an ISA unless they’re from an employee share scheme.
Lifetime ISAs may include either:
Innovative finance ISAs include:
- peer-to-peer loans - loans that are given to other people or businesses without using a bank
- ‘crowdfunding debentures’ - investing in a business by buying its debt
- funds where the notice or redemption period means they cannot be held in a stocks and shares ISA
You cannot transfer any arrangements you’ve already made or investments you already hold into an innovative finance ISA.
If you have questions about the tax rules for ISAs, you can call the ISA Helpline.
FAQs
An ISA (individual savings account) is a tax-free savings or investment account that allows you to put your ISA allowance to work and maximize the potential returns you make on your money, by shielding it from income tax, tax on dividends and capital gains tax.
What is the US equivalent of the ISA account? ›
There is a similar structure in the U.S., namely the Roth IRA, which has similar benefits to an ISA. All contributions grow free from income and capital gains tax and in addition, there are no taxes or penalties if you want to take out the capital you have put in (excluding income and gains).
What is an ISA in the US? ›
The United States Army Intelligence Support Activity (USAISA), frequently shortened to Intelligence Support Activity (ISA), also known at various times as Mission Support Activity (MSA), Office of Military Support (OMS), Field Operations Group (FOG), Studies and Analysis Activity (SAA), Tactical Concept Activity, ...
Can a US person have an ISA? ›
The IRS does not recognise the status of an ISA and so, for US taxpayers, all the usual investment and tax reporting considerations that they have, still apply. Including the ISA in your annual Foreign Bank Account Reporting (FBAR). This does not mean that a US taxpayer cannot hold an ISA.
What are the disadvantages of an ISA account? ›
What are the pros and cons of cash ISAs?
- Advantages: Tax-free savings, stable value, and the ability to transfer to better accounts.
- Disadvantages: Interest rates may decrease, funds might be locked in fixed-rate ISAs, and not all accounts permit transfers, sometimes incurring exit fees.
Putting money into an ISA
Every tax year you can save up to £20,000 in one account or split the allowance across multiple accounts. The tax year runs from 6 April to 5 April. You can only pay into one Lifetime ISA in a tax year. The maximum you can pay in is £4,000.
Which bank is best for ISA? ›
United Trust Bank offers the most competitive returns on our two-year fixed rate ISA charts, and joint leading rates over on our three- and five-year fixed rate ISA charts. Its Cash ISA 2 Year, 3 Year and 5 Year Bonds pay leading rates of 4.67% AER, 4.50% AER and 4.17% AER respectively on a minimum balance of £5,000.
What are the 4 different ISAs? ›
There are 4 types of ISA :
- cash ISA.
- stocks and shares ISA.
- innovative finance ISA.
- Lifetime ISA.
Yes. new guidance comes into play on 06/04/24 whereby you can open more than 1 type of ISA and invest in the same tax year. The limit currently remains at £20,000 in total.
How do I get into ISA? ›
The first step in joining ISA and becoming an ISA-credentialed appraiser is to apply for membership candidacy. Candidates are non-credentialed, dues paying members of ISA who are on a path to become a full ISA member. Applicants remain candidates for membership until education and experience requirements are fulfilled.
You don't need to pay tax on income from ISA investments, or capital gains tax on the profits you make from buying and selling ISA investments. You also don't need to pay tax on ISA withdrawals – regardless of whether they're made up of dividends, interest or cash generated by selling investments.
How much money does an ISA give you? ›
For the current tax year, the total ISA allowance is £20,000. If you'd like to save on behalf of a child, you can also open a Junior ISA to save an extra tax free sum. For the current tax year, that's up to £9,000. You don't have to pay in the maximum £20,000 to take advantage of your ISA allowance.
Can I have an ISA if I am not a UK resident? ›
Non UK residents cannot normally open an ISA. Expats may be able to keep their ISA, but they cannot add any more funds to it or open a new one, as long as they are not resident in the UK. We cannot advise you with regards what to do with your existing ISA. You may need to speak to an financial adviser.
What happens to my ISA if I leave the UK? ›
You must tell your ISA provider as soon as you stop being a UK resident. However, you can keep your ISA open and you'll still get UK tax relief on money and investments held in it. You can transfer an ISA to another provider even if you are not resident in the UK.
What Cannot be held in an ISA? ›
As mentioned above, funds and ETFs that do not have 'UK reporting status' also cannot be included in ISAs. Therefore, investors should ensure that funds are "UK friendly" before making a purchase. It's also worth noting that subscription shares can be held in ISAs but warrants cannot.
Is an ISA a good way to save money? ›
ISAs are a tax-efficient way to save money. The government sets a limit for how much can be saved each financial year, and doesn't charge any tax on the interest/income you earn.
Can you take money out of an ISA? ›
You can take your money out of an Individual Savings Account ( ISA ) at any time, without losing any tax benefits. Check the terms of your ISA to see if there are any rules or charges for making withdrawals. There are different rules for taking your money out of a Lifetime ISA.
How will the British ISA work? ›
Current ISAs offer a place to park savings of as much as £20,000, without paying taxes on the interest. The new British ISA pushes that limit to £25,000. Most people don't max out the existing £20,000 cap. But for those who do, the extra £5,000 is an added bonus.
Are my ISA savings safe? ›
Are Cash ISAs safe and secure? Cash you put into UK authorised banks or building societies – including within a Cash ISA – is protected by the Financial Services Compensation Scheme (FSCS). The FSCS savings protection limit is £85,000 (or £170,000 for joint accounts) per authorised firm.
