Individual Savings Accounts (ISAs)

Individual Savings Accounts (ISAs)

With an ISA you can save up to £7,200 each year and not pay UK tax on the income you receive from your investment.

This factsheet describes the types of ISA you can have and how much you can save each tax year. A tax year runs from 6 April to 5 April the following year.

Types of ISA - Cash or Stocks and Shares

An ISA can be made up of an investment in cash, or investments like stocks and shares or insurance. Individual savers are able to invest in two separate ISAs in any one tax year: one cash ISA and one stocks and shares ISA.

ISA Managers

All ISA managers, such as banks and building societies, must be authorised by the Financial Services Authority (FSA). If they are authorised, they will then have to be approved by HM Revenue & Customs (HMRC).

Using an authorised firm (or authorised person) means that you will have access to available complaints procedures, the Financial Ombudsman Scheme and the Financial Services Compensation Scheme if things go wrong.

Approval does not mean that HMRC can guarantee

  • the ISA manager’s performance, or
  • that the investment will produce a satisfactory return.

Investment limits

For cash ISAs, an individual can invest up to £3,600 a year, and can only invest with one provider in any one tax year.

For stocks and shares ISAs, an individual can invest up to £7,200 a year, and can only invest with one provider in any one tax year.

If an individual wants to invest in both a cash ISA and a stocks and shares ISA in the same tax year, the separate limits for each type of ISA still apply, but the individual cannot invest more than £7,200 in total. The individual’s cash ISA and stocks and shares ISA can be with either the same or with different providers.

Example

An individual saves £1,200 in a cash ISA at the beginning of the tax year. In the same tax year they could save another £6,000 in ISAs. This could be up to another £2,400 in the same cash ISA and the remainder of the £6000 in a stocks and shares ISA, or up to £6,000 in a stocks and shares ISA.

Transferring an ISA

You can transfer your cash ISA to another ISA manager, either into another cash ISA or into a stocks and shares ISA.

You can transfer your stocks and shares ISA to another ISA manager, but only into another stocks and shares ISA. You cannot transfer a stocks and shares ISA into a cash ISA.

You are able to transfer some or all of the money saved in previous tax years without affecting your annual ISA investment allowance.

Getting advice


If you have any questions about the tax rules for ISAs

  • call our ISA Helpline on 0845 604 1701 (Monday -Thursday 8.30-5.00, Friday 8.30-4.30).

Please have the information about your ISA available when you call.

Where to get an ISA

You can get an ISA by going to an ISA manager. These include
  • banks and building societies
  • National Savings and Investments
  • financial advisers
  • some supermarkets and retailers.

Authorised ISA managers

To find out if an ISA manager is authorised by the FSA

  • phone their Consumer Helpline on 0845 606 1234

Tax benefits of ISAs

  • No tax payable on the income you receive from your ISA savings and investments.
  • No tax payable on capital gains arising on your investments.
  • You can take your money out at any time (but some types have a notice period).
  • You do not have to tell us about income and capital gains from ISA savings and investments.

Example 1

An individual has a total of £9,000 saved in cash ISAs from previous tax years. They plan to invest their full current year ISA annual investment allowance of £7,200 in a stocks and shares ISA. In the same tax year they could also transfer some or all of the £9,000 held in cash ISAs in to any stocks and shares ISA(s).
You are also able to transfer money saved in the current tax year. Such transfers must be the whole amount saved in that tax year in that ISA up to the day of the transfer. Once the money is transferred, it is treated as if it had been invested directly into the new ISA in that tax year. You are then still able to save up to the full remaining balance of your £7,200 annual ISA investment allowance in that tax year, including up to £3,600 in a cash ISA.

Example 2

An individual saves £3,600 in a cash ISA at the beginning of a tax year. They could transfer the whole £3,600 to a stocks and shares ISA. The individual could then still save up to another £3,600 into their ISAs, either in the same stocks and shares ISA, in a cash ISA or in a combination of both.

Your ISA must be transferred directly between your existing ISA manager and the new one. Ask the new ISA manager to arrange the transfer. Check the terms and conditions with your ISA manager to find out if you will be charged for transferring.

You cannot arrange a transfer yourself by closing the first ISA and paying the money to another ISA manager.

Duplication

Remember you cannot invest in more than one cash ISA, or more than one stocks and shares ISA in the same tax year.

Mistakes do happen. If you do invest in more than one ISA of the same type in a tax year, the second ISA will not be tax-advantaged.

If this has happened call our ISA helpline. Have the details of your ISA accounts to hand when you call.

Moving abroad

You can only subscribe to an ISA if you are resident and ordinarily resident in the UK for tax purposes. Overseas residents are not eligible to apply for an ISA. If you are unsure about this, call our Centre for Non-Residents on

  • 0845 070 0040 (UK) or
  • 44 151 210 2222 (from abroad).

If you cease to be a UK resident while you already have an ISA open, you will no longer be able to put money into it. However, you will still be able to keep your ISA open and you will still be entitled to the tax benefits on investments held in the ISA. If you then return to be UK resident and ordinarily resident, you can start putting money in again.

Crown employees overseas

If you are a crown employee, such as a diplomat or a member of the armed forces, and you are working overseas and paid by the Government, you are entitled to open an ISA. You can continue to invest in your ISA while you are overseas.
This also applies to your husband, wife or civil partner.

Financial Services Authority

The Financial Services Authority (FSA) is the independent watchdog set up by the government to regulate financial services and protect your rights.

The FSA publish a booklet called The FSA Guide to Financial Advice. You can get it

Complaints about ISAs

The Financial Ombudsman service helps to settle individual disputes between consumers and financial firms. Their service is free.

To find out more information