What is an ISA?

Individual Savings Accounts allow you to shield cash or investments from the taxman - read our beginner's guide to find out how to make the most of your allowance

Emma Wall 5 March, 2018 | 1:30PM

Individual Savings Accounts (ISAs) are strictly speaking not investments themselves but wrappers which allow investments to be made tax free. By putting money into an ISA it is possible to shelter various kinds of investment from the need to make capital gains tax (CGT) or income tax payments.

In July 2014, the New ISA (NISA) was launched allowing investors more flexibility to move their tax-free lump sum between investments and cash. The annual allowance was also increased to £15,000. The ISA allowance is usually raised at the start of each new tax year, and in April 2017 it jumped significantly from £15,240 to £20,000 a year.

Additional vehicles include the Help to Buy ISA, designed to help first time buyers on the property ladder, which has a total limit of £12,000 and the Lifetime ISA, a kind of ISA/pension hybrid which has an upper limit of £4,000 a year. You must be between 18 and 50 to qualify. Both these vehicles differ to a traditional ISA because they are topped up with contributions from the State. 

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Emma Wall  is former Senior International Editor for Morningstar

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