SAVINGS & INVESTMENTS

Individual Savings Account (ISA)

Allow your money to grow free from UK income tax and capital gains tax

Individual Savings Account (ISA)

An Individual Savings Account (ISA) is a tax-efficient ‘wrapper’ used to hold cash savings or investments such as shares, bonds, and collective funds. It allows your money to grow free from UK income tax and capital gains tax.

ISAs are available to individuals who are resident in the UK. They are also accessible to Crown servants (such as those in the UK’s armed forces or diplomatic service) and their spouses or civil partners, even if they are not resident in the UK. To open an adult ISA, you must be aged 18 or over.

ISA Allowances and Key Rules for 2025/2026

For the tax year running from 6 April 2025 to 5 April 2026, the government has set the following allowances and rules:

Overall allowance: The total amount you can save or invest across all your ISAs is £20,000.
Junior ISA (JISA) allowance: The separate allowance for a Junior ISA is £9,000.
Lifetime ISA (LISA): You can contribute up to £4,000 per tax year into a LISA. This contribution counts towards your overall £20,000 ISA allowance.

You can split your £20,000 allowance across different types of ISAs:

Recent changes to ISA rules

Several updates have been introduced to make ISAs more flexible:

Multiple subscriptions: You can now pay into multiple ISAs of the same type with different providers within the same tax year. This allows you to take advantage of different interest rates or investment opportunities.
Partial transfers: You are now able to transfer part of the money you have paid into an ISA in the current tax year to another provider, without having to move the entire amount.
No need to reapply: You no longer need to reactivate an existing ISA if you have not contributed to it for a tax year, removing unnecessary administration.
Age harmonisation: The minimum age to open any type of adult ISA is now 18. (Note: 16 and 17-year-olds can still open and manage their own Cash JISA).

How ISAs work

ISAs are created to promote saving and investing. They typically have a low minimum subscription, and for many products, no required minimum investment period.

The main advantage is that your returns are tax-free. This can be especially appealing to higher-rate taxpayers. For instance, within a Stocks & Shares ISA, any growth in your investments is exempt from capital gains tax, and most income is exempt from income tax.

You can use your annual allowance in various ways, for example:

Accessing your money and making transfers

Your ability to access your funds depends on the type of ISA. Easy-access Cash ISAs permit withdrawals at any time, whereas fixed-rate products may have restrictions. Some providers offer ‘Flexible ISAs’, which allow you to withdraw money and pay it back within the same tax year without using up more of your annual allowance.

You can transfer your ISA between providers at any time. This is helpful for switching to an account with a better interest rate or lower investment charges.

Always use the new provider's official transfer process. Never withdraw the cash yourself to move it, as this will cause the money to lose its tax-free status.
You can transfer money saved in previous tax years and in the current tax year.
The new rules permit partial transfers of current-year subscriptions, providing you with greater control.

* Please note that advice on Innovative ISAs is not available through all financial planning institutions.

THE VALUE OF INVESTMENTS AND THE INCOME THEY PRODUCE CAN FALL AS WELL AS RISE. YOU MAY GET BACK LESS THAN YOU INVESTED.

ISA INVESTORS DO NOT PAY ANY PERSONAL TAX ON INCOME OR GAINS, BUT ISAS MAY PAY UNRECOVERABLE TAX ON INCOME FROM STOCKS AND SHARES RECEIVED BY THE ISA MANAGERS. TAX TREATMENT VARIES ACCORDING TO INDIVIDUAL CIRCUMSTANCES AND IS SUBJECT TO CHANGE.