What is an ISA?

An introduction to individual savings accounts (ISAs)

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ISAs offer a way for people in the UK to save or invest. Each financial year, you are given a new allowance that you can add into an ISA over the course of the year, without incurring any tax.1

Types of ISA

ISAs come in two forms: cash ISAs and stocks and shares ISAs. You can have one of each, but deposits in either will count towards the same allowance.

  • Cash ISAs work like traditional savings accounts, offering a rate of interest on any money you deposit.
  • Stocks and shares ISAs allow you to invest in qualifying assets.

At IG we offer a stocks and shares ISA that you can use to invest in a range of markets, such as company shares and exchange traded funds (ETFs). And because ISAs are tax free, you won’t have to pay income tax on any dividends you receive or capital gains tax on any profits you make.

As with any investment, profits are not guaranteed and you may get back less than you initially invested.

Flexible ISAs

In 2016, the government launched flexible ISAs. These let you withdraw some of the money in your ISA and then deposit it again later, without reducing your total allowance. That means that if you had an ISA with £5000 deposited and remove £1000, you’ll have an extra £1000 added to your remaining limit to reflect the fact that you can put that money back in.

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1Tax laws depend on individual circumstances and may differ in a jurisdiction other than the UK.

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