What Is An ISA?

An Individual Savings Account (ISA) is a tax-efficient wrapper that can sit around either Cash or Stocks and Shares investments. There are also other types of ISA's available.

With a Cash ISA, you don’t pay tax on any interest on savings. With a Stocks and Shares ISA, you don’t pay tax on any dividends, interest or capital gains you’ve made on your investments.

You have the freedom to choose what sits within your tax-efficient ISA – it can be investments that include cash, bonds or equities or a combination of all three. However the UK government sets an annual allowance on how much you can invest in an ISA - for the 2020/21 tax year the limit is £20,000.

Only UK residents are eligible for ISAs. You need to be aged 16 years or over to set up a Cash ISA account in your own right; but 18 years or over to invest in a Stocks and Shares ISA. You can take out both a Cash and Stock and Shares ISA in the same tax year. However you can't take out more than one of the same type e.g. 2 Cash or 2 Stocks and Shares. Tax rules can change.

Risk warning - Investment involves risk. The value of investments, and the income from them, can go down as well as up and an investor may get back less than the amount invested. Past performance is not a guide to future results.