2. How ISAs work

There are 3 types of Individual Savings Accounts (ISA):

  • cash ISA
  • stocks and shares ISA
  • innovative finance ISA

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.

If you complete a tax return, you don’t need to declare any ISA interest, income or capital gains on it.

Putting money into an ISA

Each tax year you can put money into one of each kind of ISA. The tax year runs from 6 April to 5 April.

You can save up to £15,240 in one type of account or split the allowance across 2 or 3 types.

Example You could save £10,240 in a cash ISA, £2,000 in a stocks and shares ISA and £3,000 in an innovative finance ISA in one tax year.

Your ISAs won’t 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 can’t transfer any non-ISA shares you already own into an ISA unless they’re from an employee share scheme.

Innovative finance ISAs can include peer-to-peer loans, which are loans that you give to other people or businesses without using a bank. You can’t transfer any peer-to-peer loans you’ve already made into an innovative finance ISA.

If you have questions about the tax rules for ISAs, you can call the ISA Helpline.