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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

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: 2,000+ Funds
  • Invest From: £50pm

Why we like it: Invest from as little as £50 a month or with a £1,000 lump sum. Investment choice from over 100 fund providers, giving you access to 2,000+ funds. One low-cost service fee of 0.35%*. Great service – from investment guidance on website through to UK-based phones team. PathFinder, Select 50, Investment Finder - investing tools for beginners to advanced investors. 24/7 access via online Account Management system.

* depending on how much you have invested

Special offer:

Invest and get £25 cashback » 

Build your savings with an ISA and receive £25. Exclusions, T&Cs apply.

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

FTSE 100 UCITS ETF Tracker

from Vanguard

  • Fund Choice: Tracks FTSE 100 Index
  • Invest From: £25 pm
  • Investment Options: The Fund seeks to track the performance of the FTSE 100 Index.

Low cost FTSE 100 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 FTSE 100 Index (the “Index”).

Available via:

Hargreaves Lansdown investment platform »

Important information: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

Investment Fund Supermarket ISAs

Vantage Stocks & Shares ISA

from Hargreaves Lansdown

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: 2,500+ Funds
  • Invest From: £25 pm

Why we like it: Shelter up to £20,000 this tax year with the low cost, award-winning ISA. The UK's number 1 platform for private investors. 

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.

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

What is a Peer to Peer ISA?

18th September 2020

A Peer to Peer ISA sounds complicated – but to the experienced and keen investor, it can be a great way to diversify your portfolio, try a new, innovative form of investing, while benefiting from the tax benefits associated with an ISA account. But what exactly is a Peer to Peer ISA, and which ones should you be looking at? 

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