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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:

  1. “shares” can refer to owning part of one particular company
  2. “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:

  1. An online fund supermarket
  2. A robo-adviser
  3. A Bank
  4. Stockbrokers
  5. 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. 

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.

Lifetime ISAs

Save for your first home and retirement

Compare Lifetime ISAs

Junior ISAs

Invest for your child’s future

Compare Junior ISAs: 

Stocks & Shares ISAs

Invest tax-free in stocks and shares 

Compare Stocks and Shares ISAs:

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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". 

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