ISAs (Individual Savings Accounts)

An ISA, or Individual Savings Account, is a tax-efficient savings and investment account available to UK residents. ISAs allow individuals to save or invest up to a certain amount each year without paying taxes on the interest or capital gains earned.

The ISA allowance for the 2022-2023 tax year is £20,000. This includes any amount saved in a cash ISA, a stocks and shares ISA, an innovative finance ISA, or a lifetime ISA in the same tax year.

There are four main types of ISAs in the UK: cash ISAs, stocks and shares ISAs, innovative finance ISAs, and lifetime ISAs.

Cash ISAs are savings accounts that pay interest without tax, stocks and shares ISAs are investment accounts that allow tax-free investment in shares and other securities, innovative finance ISAs allow tax-free investments in peer-to-peer loans, and Lifetime ISAs are a type of ISA that can be used to save for a first home or retirement.

Yes, you can transfer money from one ISA to another, as long as the ISAs are of the same type (e.g. cash ISA to cash ISA, or stocks and shares ISA to stocks and shares ISA).

Withdrawals from cash ISAs are unrestricted, but withdrawals from stocks and shares ISAs may be subject to penalties, such as loss of tax benefits. Lifetime ISAs have restrictions on when and how much you can withdraw without incurring penalties.

The ISA will form part of the deceased person's estate. Spouse or civil partner ISA allowances can be transferred to the surviving spouse or civil partner's ISA.