Individual savings account

An individual savings account (ISA; /ˈaɪsə/) is a class of retail investment arrangement available to residents of the United Kingdom. First introduced in 1999, the accounts have favourable tax status. Payments into the account are made from after-tax income, then the account is exempt from income tax and capital gains tax on the investment returns, and no tax is payable on money withdrawn from the scheme.

Cash and a broad range of investments can be held within the arrangement, and there is no restriction on when or how much money can be withdrawn.^[1] Since 2017, there have been four types of account: cash ISA, stocks & shares ISA, innovative finance ISA (IFISA) and lifetime ISA (LISA). Each taxpayer has an annual investment limit (£20,000 since 2020–21^[update]) which can be split among the four types as desired. Additionally, children under 18 may hold a junior ISA, with a different annual limit. An additional type of ISA, called the British ISA, was announced by the UK government in the March 2024 Spring Budget. It will have its own separate annual limit of £5,000 (in addition to the current £20,000 limit) to be used only for investment in UK companies.

Until the lifetime ISA was introduced in 2017, ISAs were not a specific retirement investment, but any type can be a useful tool for retirement planning alongside pensions.^[2] On 6 March 2024, Jeremy Hunt announced a British ISA in which investors would be allowed to invest a further £5000 in UK equities and bonds.