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Individual savings account
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Individual savings account
An individual savings account (ISA or Isa; /ˈaɪsə/) is a class of retail investment arrangement available to residents of the United Kingdom. First introduced in 1999 as an Individual Special Savings Account (ISSA), the accounts have favourable tax status: they are exempt from income tax and capital gains tax on the investment returns, and no tax is payable on money withdrawn from the scheme.
Cash and a broad range of investments can be held within the arrangement, and there is no restriction on when or how much money can be withdrawn. Since 2017, there have been four types of account: cash ISA, stocks & shares ISA, innovative finance ISA (IFISA) and lifetime ISA (LISA). Each taxpayer has an annual investment limit (£20,000 since 2020–21[update]) which can be split among the four types as desired. Additionally, children under 18 may hold a junior ISA, with a different annual limit.
Until the lifetime ISA was introduced in 2017, ISAs were not a specific retirement investment, but the accounts can be useful tools for retirement planning alongside pensions.
ISAs were introduced on 6 April 1999, replacing the earlier personal equity plans (PEPs; very similar to a Stocks and Shares ISA) and tax-exempt special savings accounts (TESSAs; very similar to a Cash ISA). Other tax-advantaged savings that predate ISAs include many offered by National Savings and Investments, a state-owned institution which has in the past offered a range of other tax-free accounts, in addition to its own ISAs.
Junior ISAs, introduced in 2011, replaced the Child Trust Fund.
With a few exceptions, such as from an employee share ownership plan, all investor contributions must be in cash, not kind. Adult ISAs are available to UK residents aged over 16, provided that they have a National Insurance number, but individuals between 16 and 18 are only permitted to use the adult cash component or can use a Junior ISA.
There are four broad types of adult ISA: cash, stocks and shares, innovative finance (including peer-to-peer lending) and lifetime.
PEPs became stocks and shares ISAs, with an exemption that allowed them to continue to hold investments that could not be held in a stocks and shares ISA, provided that the investment met the pre-2001 PEP rules.
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Individual savings account
An individual savings account (ISA or Isa; /ˈaɪsə/) is a class of retail investment arrangement available to residents of the United Kingdom. First introduced in 1999 as an Individual Special Savings Account (ISSA), the accounts have favourable tax status: they are exempt from income tax and capital gains tax on the investment returns, and no tax is payable on money withdrawn from the scheme.
Cash and a broad range of investments can be held within the arrangement, and there is no restriction on when or how much money can be withdrawn. Since 2017, there have been four types of account: cash ISA, stocks & shares ISA, innovative finance ISA (IFISA) and lifetime ISA (LISA). Each taxpayer has an annual investment limit (£20,000 since 2020–21[update]) which can be split among the four types as desired. Additionally, children under 18 may hold a junior ISA, with a different annual limit.
Until the lifetime ISA was introduced in 2017, ISAs were not a specific retirement investment, but the accounts can be useful tools for retirement planning alongside pensions.
ISAs were introduced on 6 April 1999, replacing the earlier personal equity plans (PEPs; very similar to a Stocks and Shares ISA) and tax-exempt special savings accounts (TESSAs; very similar to a Cash ISA). Other tax-advantaged savings that predate ISAs include many offered by National Savings and Investments, a state-owned institution which has in the past offered a range of other tax-free accounts, in addition to its own ISAs.
Junior ISAs, introduced in 2011, replaced the Child Trust Fund.
With a few exceptions, such as from an employee share ownership plan, all investor contributions must be in cash, not kind. Adult ISAs are available to UK residents aged over 16, provided that they have a National Insurance number, but individuals between 16 and 18 are only permitted to use the adult cash component or can use a Junior ISA.
There are four broad types of adult ISA: cash, stocks and shares, innovative finance (including peer-to-peer lending) and lifetime.
PEPs became stocks and shares ISAs, with an exemption that allowed them to continue to hold investments that could not be held in a stocks and shares ISA, provided that the investment met the pre-2001 PEP rules.