An Individual Savings Account (ISA) is a financial product available to residents in the United Kingdom. It is designed for the purpose of investment and savings with a favourable tax status. Money is contributed from after tax income and not subjected to income tax or capital gains tax within the ISA or upon withdrawal. Cash and a broad range of investments can be held and there is no restriction on when or how much money can be withdrawn. It is not a pension product but can be a useful complement to a pension for retirement income, particularly when it is desirable to draw down capital at a faster rate than permitted in a pension.

Cash ISA (typically offered by banks)

A cash deposit that is similar to any other ordinary savings account, apart from the tax-free status.

Stocks and Shares ISA (typically offered by stockbrokers)

The money is invested in ‘qualifying investments’, which include:

1) Cash
2) UCITS authorised funds like unit trusts and ETFs as well as investment trusts
3) Shares listed on one of the many recognised stock exchanges, including AIM
4) Fixed interest securities such as treasuries, corporate bonds, debentures and Eurobonds
5) Depository interests such as CDIs or ADRs, provided there is an underlying listing on a recognised stock

Subscription Limits

The ISA Allowance for the 2016/2017 tax year is £15,240. For the 2017/2018 tax year, it will be £20,000. Confirmation of the current subscription limit can be found on the HM Revenue & Custom’s website ‘’.