What is an ISA? ISAs Explained | The Share Centre

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Tax allowances and the benefits of tax-efficient accounts could change.

What is an ISA?

ISA is short for 'Individual Savings Account'. No matter what rate of tax you pay, when you invest your money in a Stocks and Shares ISA or Lifetime ISA, it's very tax-efficient compared to a normal investment account:

  • No further tax to pay on income you receive from savings and investments 
  • No Capital Gains Tax
  • No need to tell your tax office (HMRC) that you have an ISA

ISAs are very popular with investors since they can save you tax. No matter whether you have existing investments or are looking to get started, a Stocks and Shares ISA, or if you are aged between 18-39 a Lifetime ISA, could benefit you. Please note that the advantages of a Lifetime ISA depend upon your personal circumstances.

What's your ISA allowance? How much can you invest?

The Government sets an annual ISA allowance (ISA limit) on how much you can invest in an ISA each tax year. This year (6 April 2017 to 5 April 2018), your ISA allowance is £20,000 and the full amount can be split between a Stocks & Shares ISA , a Cash ISA, an Innovative Finance ISA and a Lifetime ISA (subject to the Lifetime ISA allowance).  Please note, The Share Centre does not offer Cash ISAs or Innovative Finance ISAs.

Unused ISA allowances don't roll over to the next tax year if you don't invest the full amount, so it’s a case of ‘use it or lose it’. However, your ISA itself doesn't end when the tax year does, so you can keep adding to it each year and get the benefits on the cumulative amount. Don't forget to invest your ISA allowance at the start of the tax year (6 April) to make the most of it. 

Who can open a Stocks and Shares ISA?

To open a Stocks and Shares ISA:

  • You must be aged 18 or over. 
  • You need to be a UK resident.
  • You must not have already opened a Stocks and Shares ISA in the same tax year.  

Withdrawing money

You can sell your investments and withdraw money from your Stocks and Shares ISA at any time. At The Share Centre the new Flexible ISA rules apply, so you can now repay those withdrawals back to your ISA, providing both transactions are within the same tax year. Please note that Flexible ISA rules do not apply to Lifetime ISAs, and that a withdrawal charge may be applied if you take money out of a Lifetime ISA.

Types of ISA

  • Stocks and Shares ISA: Make your money work harder by investing in the stock market. 
  • Stocks and Shares Junior ISA: Plan for your child's future by investing in the stock market. 
  • Lifetime ISA: If you are aged 18-40, earn a 25% government bonus whilst saving for your first home and/or retirement (on or after your 60th birthday).  Please note that the advantages of a Lifetime ISA depend upon your personal circumstances and withdrawals may be subject to a 25% charge. 
  • Cash ISA / Cash Junior ISA: Save money without having to pay Income Tax on interest. Please note that The Share Centre does not offer Cash ISAs or Junior Cash ISAs.
  • Innovative Finance ISA: Earn income by investing in Peer to Peer loans. Please note that The Share Centre does not offer an Innovative Finance ISA.

Learn more on ISAs

Learn about our ISAs and the benefits of investing through us.