What Is an ISA? A Simple UK Guide
An Individual Savings Account (ISA) is a tax-free wrapper provided by the UK government. Any interest, dividends, or capital gains earned inside an ISA are completely free from income tax and capital gains tax.
For the 2024-25 tax year, every UK resident aged 18 or over can contribute up to £20,000 across all their ISAs. The allowance resets each April 6 and cannot be carried forward — use it or lose it.
There are four main types: Cash ISA (like a savings account), Stocks and Shares ISA (for investing), Innovative Finance ISA (peer-to-peer lending), and the Lifetime ISA (for first-time buyers or retirement, with a 25% government bonus up to age 50). You can split your £20,000 allowance across multiple types in the same tax year.
Frequently Asked Questions
Can I have more than one ISA?
Yes. Since April 2024 you can open and pay into multiple ISAs of the same type in a single tax year, as long as the total stays within the £20,000 annual limit.
What happens if I withdraw from my ISA?
With a flexible ISA you can withdraw and replace money in the same tax year without using up allowance. Non-flexible ISAs treat any withdrawal as lost allowance for that year.
Is there a minimum age for an ISA?
You must be 18 for a Stocks and Shares or Innovative Finance ISA, and 18-39 to open a Lifetime ISA. A Junior ISA (JISA) is available for under-18s with a separate £9,000 allowance.
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