What is an ISA?

An ISA is an Individual Savings Account which receives generous tax breaks from the government to encourage you to invest or save.

While it’s not an investment in its own right, an ISA enables you to protect your savings and investments from tax on capital gains, dividends and interest.

The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results.

Why invest in an ISA?

Quite simply, an ISA enables you to shield a portion of your income or capital gains from tax. There’s a set ISA allowance for each tax year, which represents the maximum you’re able to invest in your ISA. The allowance for 2018/19 is £20,000.1

Your annual ISA allowance can’t be rolled over to next year, so if you don’t use it before the end of the tax year on 5 April, it will be gone for good.

Remember that tax rules can change and depend on individual circumstances.

What types of ISA are available?

There are two main types of ISA – a cash ISA and a stocks and shares ISA. You can only pay into one cash and one stocks and shares ISA each tax year – splitting your allowance between them if you wish – but you are able to open a new ISA with a different provider each year if you want to.

Cash

A cash ISA is just like a normal savings account, but the interest you earn is tax free.

Saving cash in an ISA is risk-averse, as you cannot end up with less than you put in. However, with interest rates so low at the moment, inflation could mean that your cash is effectively worth less in the future than it is now. 

A ‘help to buy’ ISA is also classed as a cash ISA.

Read more

How inflation is killing your cash savings

Stocks and shares

A stocks and shares ISA enables you to invest in a wide range of financial products with significant tax benefits.

When investing in the stock market, your potential returns are significantly higher than with cash investments. You also have the possibility of receiving dividends – a portion of a company's profits paid to shareholders – which will be free from tax if your shares are held within an ISA.

However, remember that your investments may also fall in value, meaning you could get back less than you originally deposit.

Read more

How to make the most out of your ISA
What can I invest in an ISA?

At IG, we offer stocks and shares ISAs. With a share dealing ISA you can choose your own investments; with an IG Smart Portfolio ISA our experts will manage a diversified investment portfolio that’s tailored to your risk profile. As they’re classed as a single stocks and shares ISA, you can invest up to £20,000 between them in 2018/19.1

ISA news

How inflation is killing your cash savings
How to make the most out of your ISA
What can I invest in an ISA?

Flexible ISAs

All ISAs held with IG are flexible. This means you can withdraw the money invested in your ISA and reinvest it within the same tax year, without reducing your total allowance.

Who can invest in an ISA?

Any UK resident aged 18 or over can invest in a stocks and shares ISA. There’s no upper age limit and funds can be withdrawn whenever you choose.

1 Invest up to £20,000 in an ISA in 2018/19 without incurring capital gains or income tax. Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.

2 If you have an active CFD or spread betting account that is accessible under the same login as your share dealing account, you’ll automatically qualify for our lowest commission rate if you’ve placed at least one spread bet or CFD trade in the previous calendar month. If you do not have a CFD or spread betting account with IG, your commissions will be determined based on your share-dealing activity (UK stocks only). Place 10+ trades in the previous month to qualify for a £5 commission rate. See our full list of share dealing charges and fees.