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What is an ISA?

ISA rules, limits and tax benefits explained

With investment, your capital is at risk. Taxation depends on individual circumstances. ISA and tax rules may change. 

ISAs (Individual Savings Accounts) are simple accounts for making tax-free savings and investments. The Government introduced them in 1999 to encourage people to save for the future.

Tax benefits of ISAs

In an ISA any interest you earn from cash savings or investment gains you make are tax-free. Any investments you hold in a Stocks & Shares ISA are also free from capital gains tax. You don’t have to declare ISAs on your annual tax return.

In an ISA any cash interest, investment gains or dividends are tax-free.

How much can I invest in an ISA?

Because ISAs come with such generous tax breaks there is a limit to how much you can pay into them each year. This is called your ISA allowance. This tax year your ISA allowance is £20,000 and you can also pay £9,000 into a Junior ISA for children.

More information on ISA allowances

Can I transfer ISAs from one provider to another?

Yes, transferring ISAs between providers is easy. People often transfer their ISAs because they are unhappy with their level of service, want to consolidate their investments or are switching from Cash ISAs to Stocks & Shares ISAs. Your ISA allowance isn’t affected when you transfer old ISAs to a new provider.

Ready to transfer?

It's quick and easy to transfer your investments to Bestinvest

The different types of ISA

There are a number of different types of ISAs that work in different ways.

  • Stocks & Shares ISAs

    Stocks & Shares ISAs let you invest your ISA allowance in the stock markets. They can potentially give you better returns than Cash ISAs over the long term, but as with any investments there is the risk of losing money.

  • Cash ISAs

    Cash ISAs give you a variable or fixed rate of interest, usually over a set period of time. You are guaranteed this income but interest rates are currently at all-time lows.

  • Junior ISAs

    Junior ISAs come with the same tax benefits as adult ISAs. You can open one for your child and invest the £9,000 Junior ISA allowance into it each year. You can also transfer Child Trust Funds into a Junior ISA.

  • Lifetime ISAs

    The Lifetime ISA was introduced in April 2017. It gives you a £4,000 annual allowance (which counts towards your overall £20,000 ISA allowance) with the Government adding a 25% bonus to anything you pay in up to age 50. You can use the money to either buy your first home or to fund your retirement once you reach age 60. You can make withdrawals for other reasons, but you will pay a 25% charge on anything you take out.

Open a Stocks & Shares ISA

Opening a Stocks & Shares ISA with Bestinvest is quick and easy.

  • It only takes five minutes to open an ISA online
  • ISA charges can start from as little as 0.2% a year
  • A wide range of investment options

Speak to an expert about ISAs

Speak to our experts for more information on ISAs or to find out about our Stocks & Shares ISA.

How Bestinvest can help

Looking for an efficient way to invest? Become a Bestinvestor with a Stocks & Shares ISA (Individual Savings Account) and save tax free.

Wondering what your ISA could be worth? Use our ISA calculator and stay on track the easy way.

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