Individual Savings Accounts (ISAs)

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How ISAs work

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:

  • cash
  • stocks and shares

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.

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