ISAs

Isas are UK tax-advantaged savings and investment accounts designed to help individuals grow money with limited tax liability. Within an ISA, any interest, dividends, or capital gains are sheltered from UK income and capital gains taxes, subject to annual contribution limits and product rules.

Types of Isas include Cash Isa, Stocks and Shares Isa, Innovative Finance Isa, Lifetime Isa, and Junior Isa. A Cash Isa holds cash and pays tax-free interest; a Stocks and Shares Isa holds investments such as shares or funds with tax-free growth; an Innovative Finance Isa allows lending via peer‑to‑peer platforms with tax-free interest; a Lifetime Isa is aimed at first-time home purchases or retirement and includes a government bonus; a Junior Isa is available for children under 18 and can be held as cash or investments.

The adult ISA annual allowance is set by HM Revenue & Customs and is shared across all ISA types in a given tax year. For recent years, the total allowance has been £20,000, with the Lifetime Isa having its own £4,000 annual limit that counts against the overall total. The Junior Isa has its own annual limit, typically set higher than other ISAs but capped by government rules. Withdrawals and access rules vary by product: Cash Isas generally permit flexible access, while Stocks and Shares and Innovative Finance Isas expose savers to investment risk; Lifetime Isas impose penalties for withdrawals for non-qualifying purposes before age 60; Junior Isas mature into a regular adult account at age 18.

ISAs are regulated for tax purposes by HMRC and for consumer protection by the Financial Conduct Authority, with product fees and risk profiles varying by provider and investment choice.