skip to main content
7th
Jul 2020
/

Is An Investment ISA Tax Free?

Is An Investment ISA Tax Free?

There are lots of questions a first-time investor might want to know when thinking about opening an Investment ISA. Top of the list is: Will my Investment ISA be tax free? Look no further - we've got all the details you need to know. 

You have some money to spare and are looking to invest, but you want to make sure you can make the most of your tax-free ISA allowance to make your money work for you.

So, with this in mind: is an investment ISA tax-free?

The short answer: Yes!

The long answer: ISA accounts are a great way to gain interest on your money while keeping it safe from the taxman. 

They work by keeping your money in a tax-free wrapper, meaning that any returns you might earn on an ISA account (by investment or interest rates) are not taxed.

There are lots of different types of ISA accounts, including an Investment ISAs (also known as a Stocks and Shares ISA).

So, what exactly is a Stocks and Shares ISA?

“Stocks” and “shares” are interchangeable terms, though they have different meanings:

  • “shares” can refer to owning part of one particular company
  • “stocks” can refer to shares in a number of different companies

An ISA is a specific way to save which gives you tax-free returns on your savings (or in this case, investments). A Stocks and Shares ISA, or an Investment ISA, is a form of ISA.

How are these "tax-free"?

Stocks and Shares ISAs are tax-free by design. 

Government legislation gives every adult UK citizen a yearly allowance which they are able to put into an ISA and enjoy tax-free returns.

Currently, that amount stands at £20,000 per person per year – and all the returns you make on investing some or all of your allowance will be tax free if placed into an ISA.

In the past few years, interest rates for Cash ISAs and Savings Accounts have been fairly poor. 

However, interest rates for Stocks and Shares ISAs (or Investment ISAs) are better, which is why they are often a more attractive option - especially for those looking to get on the investment ladder.

Where can I get one?

Stocks and Shares ISAs are available on lots of different platforms – which all offer a wide variety of different funds where you can put your money to work. You could look for an Investment ISA from:

  • An online fund supermarket
  • A robo-adviser
  • A Bank
  • Stockbrokers
  • A wealth manager

If you want to read more about different kinds of Investment ISAs, or compare the latest and best rates, then read our page on Investment ISAs. 

Investment Fund Supermarket ISAs

Stocks & Shares ISA

from Fidelity

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Choose from over 4,000 investment options, including one of the widest fund ranges in the UK, plus shares, investment trusts and exchange-traded funds. There’s also expert guidance to help with your investment decisions, which includes a selection of tools and insights from Fidelity’s experts. Capital at risk. Tax and ISA rules apply.
  • Invest From: £25 through regular savings or £1,000 lump sum

Why we like it: Fidelity has lots of investment options, plus an extensive range of guidance tools to help you decide what to invest in. Their award-winning ISA is easy to start and offers great value, their a typical service fee of just 0.35%. Other ongoing charges apply. On top of that, everything is backed by Fidelity’s 50 years of investment experience.

Important: The value of investments can go down as well as up so you may get back less than you invest. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

Tax treatment depends on individual circumstances and all tax rules may change in the future.

Selected ISAs

FTSE 100 UCITS ETF Tracker Fund

from Vanguard

ISA Option
Allows ISA Transfers
Regular Savings
  • Fund Choice: Tracks FTSE 100 Index
  • Invest From: £25 pm
  • Investment Options: Provides exposure to the FTSE 100 index of the largest companies listed on the London Stock Exchange at a highly competitive price.

Low cost tracker with a 0.09% pa annual charge.

The Fund employs a passive management – or indexing – investment approach, through physical acquisition of securities, and seeks to track the performance of the Index (the “Index”).

Available via:

Hargreaves Lansdown investment platform »

Important: The value of investments can go down as well as up so you may get back less than you invested. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

Investment Fund Supermarket ISAs

Stocks & Shares ISA

from Hargreaves Lansdown

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Choose from over 2,500 funds, shares, investment trusts and more to build your portfolio. UK and overseas shares. Corporate and government bonds. Exchange Traded Funds (ETFs). Ready-made portfolios to suit your goals and attitude to risk from £1,000. Expert research to help make your decisions. Investment trusts and much more. Capital at risk.Tax & ISA rules apply
  • Invest From: £25 pm or from £100 lump sum

Why we like it: Choose your own funds or alternatively a ready made portfolio. Market-beating savings and discounts of up to 5.5%. No charge to buy and sell funds. Low, tiered annual charges for holding funds, with a maximum of just 0.45% per annum. Free fund updates and analysis from experienced research team. Invest with a financially secure, FTSE 100 company.

Important: The value of your investments can rise as well as fall. You may get back less than you invested. If you’re unsure, we recommend you ask for independent advice.

Selected ISAs

Investment ISA

from Barclays Smart Investor

ISA Option
Allows ISA Transfers
Regular Savings
  • Trade From (standard trader rate): £3 for funds (or £1 for each automated regular investment)

Why we like it: Use your ISA allowance now. Invest in over 2,000 funds plus Exchange Traded Funds (ETFs), Investment Trusts, shares and more. If you have £10,000 or more in ISAs or investments held elsewhere and request to transfer them to us by 17 May, you could get £50-£1,000 cashback. T&Cs apply. Capital’s at risk. There are risks associated with transferring in existing ISAs and investments – please see Barclays Smart Investor’s site for details.

Important: The value of investments can fall as well as rise and you may get back less than you invest. Tax rules can change, and individual effects may vary.

Important Risk Information:

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice.

High Income ISAs

High income ISA ideas:

ISAs Products

Cash ISAs

Fixed Rate & Instant Access ISAs:

Cash ISAs: 

Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

Latest News

5 Considerations for Your Next Investment ISA

15th March 2021

You've decided to invest your savings into a Stocks and Shares ISA. You'll be using your tax-free ISA allowance for this year before the deadline, while also investing your money for your future. But what do you need to consider before opening an account? We've put together a list of our top five considerations for you to think about before you click "apply". 

Newsletter Signup

Sign up to our Newsletter to get exclusive news and offers direct to your inbox.

About us

ISA.co.uk is a trading style of Fair Investment Company.

We've been comparing and recommending ISAs for many years so you can trust you're in good hands.

About us

4.74 Average

23 Reviews

Jen

I found the way the different options are presented very clear - much more useful than some other comparison sites. I sent it to my daughter as well.

Paul

Very informative, find myself a good ISA account with best return in terms of interest.

Sue

Easy to use website and up to date. Saved the link on my tablet.

Rob Holden

The website was very useful and informative.

Andrew Johnson

ISA can be confusing at first and this site includes a useful and helpful introduction into the world of ISAs