How much can I put in an ISA each year?

There is an overall annual allowance set by the government, which can be split across ISAs. Check the current figure on official sites.

UK residents aged 18 or over for most types, and 16 or over for cash ISAs, with rules for other types. Children can have Junior ISAs through a parent or guardian.

Is money in an ISA safe?

Cash ISAs with authorized banks are covered by deposit protection up to limits. Stocks and shares ISAs carry investment risk, and values can fall.

What Is an ISA? UK Tax-Free Savings Account Explained

An ISA, or Individual Savings Account, is a type of savings or investment account in the United Kingdom in which the interest, dividends and gains are free of UK tax. Each tax year, people can pay in up to an annual allowance set by the government, and the money can grow without being taxed. ISAs are popular for both everyday savings and long-term investing.

Main types

Cash ISA: works like a savings account, with interest paid tax-free. Rates may be fixed or variable.
Stocks and shares ISA: holds investments such as funds, shares and bonds, with tax-free gains and dividends. Values can rise or fall.
Lifetime ISA: for people under a certain age, to save for a first home or retirement, with a government bonus and penalties for other withdrawals.
Innovative finance ISA: allows certain peer-to-peer and similar investments, which are riskier.
Junior ISA: for children, with an adult managing it until the child turns 18.

Rules, allowances and eligibility are updated by the government, so check the current details.

How the allowance works

There is one overall annual limit for adult ISAs, which you can divide among types. Unused allowance does not carry over to the next tax year. Some ISAs allow you to withdraw and replace funds within the year without losing allowance, called flexible ISAs, if offered by the provider.

Why students use ISAs

Tax-free interest: useful if you have savings above the personal savings thresholds.
Long-term investing: a stocks and shares ISA lets you invest small amounts regularly.
Saving for goals: such as a deposit, travel or emergencies.
Simplicity: no tax reporting for ISA income.

Many students have low incomes and may not pay tax on savings interest anyway, so the benefit may be small until savings grow. Compare rates and fees, and consider what you need.

Choosing and cautions

Compare providers on rates, fees and access.
Check protection: deposits are covered by the financial compensation scheme up to limits.
Understand investment risk in stocks and shares ISAs.
Watch for rate changes on variable products.
Do not overspend on fees.

Related accounts abroad

Similar tax-advantaged accounts include the Roth IRA in the US and the TFSA in Canada.

Related terms

See TFSA, Roth IRA, compound interest, inflation and direct deposit.