What is an Individual Savings Account (ISA)?

If you are looking to save or invest money, then an Individual Savings Account (ISA) could be a good place to start.

An ISA is a tax-efficient home for your money where you can invest in a cash ISA, a stocks and shares ISA or an innovative finance ISA or a mixture of the three, up to your annual ISA limit, which is £20,000 in the 2017/18 tax year. You cannot subscribe to more than one type of ISA within a tax year. Please note that the annual allowance runs from 6 April to 5 April.

A cash ISA is a simple savings account where the interest you receive on your money is tax-free.  

An ISA is a tax-efficient home for your money

With a stocks and shares ISA you can put your money into different investments, including funds, individual company shares, as well as government bonds and corporate bonds.

The innovative finance ISA is peer-to-peer lending that allows individuals to lend cash directly to borrowers.

With a cash ISA, you don’t pay tax on any interest.

With a stocks and shares ISA or an innovative finance ISA, you don’t pay tax on any income or capital gains from your investments.

Who can open an ISA?

You must be:

• 16 or over for a Cash ISA.
• 18 or over for a Stocks and Shares ISA.
• Resident in the UK.
• A Crown servant (e.g. diplomatic or overseas civil service) or their spouse or civil partner.

Transfers

You can transfer your ISAs between ISA providers and between ISA types. For example you can transfer from a cash ISA to a stocks and shares ISA and vice versa. If you transfer an ISA you subscribed to in a previous tax year, you can still invest your ISA allowance in this tax year.

Please note that we do not currently offer a cash ISA.

We are not recommending one course of action over another or providing advice.

This is based on our current understanding of current tax legislation and HM Revenue & Customs practice, both of which may change without notice. Tax treatment depends on your individual circumstances and may vary in the future.

Remember the value of your investment can down as well as up and you may not get back what you put in.

 

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