Tax-free savings account

An ISA is an Individual Savings Account that enables you to save or invest money without paying tax on the interest or on the investment returns you receive, making them particularly attractive to higher rate tax payers.  They are only open to UK residents for tax purposes and you must be aged 16 or over. For some ISAs, you may need to be 18 or over. 

Annual allowances

For each tax year, there’s a limit to the amount you can deposit into your ISA – this is your annual allowance. The allowance for the 2018/19 tax year is £20,000, which you can invest into a cash or stocks and shares ISA during the same tax year.  Tax rules may change in the future and any benefits to you depend on your individual circumstances.

Withdrawals from an ISA can be made at any time without loss of tax relief, but it is only possible to hold one ISA per tax year, so if an ISA is closed within the same tax year that it was opened, another one cannot be started until the next tax year.

Tax-free interest every year

The tax year runs from 6 April to 5 April. Each tax year, you can either open a new ISA or top up an existing ISA until you reach your annual allowance. You’ll then earn tax-free interest on your whole balance every year.


If you have more than one ISA (cash or investment) you can combine them transfer your money into a new ISA.  Transferring your ISA means previous years’ savings you transfer won’t count towards your current annual allowance.  You can transfer all or just some of your other ISA balances, and you can also transfer between cash and investment ISAs.

Withdrawing money

While you can only make deposits into one ISA each tax year, you may be able to withdraw money from your current or previous year’s ISAs at any time – depending on the terms of your particular ISA.  Any funds you withdraw within a tax year can be replaced during the same tax year without counting towards your annual ISA allowance. This is known as ISA flexibility.