An ISA (or “Individual Savings Account”), is a type of savings account where all the gains from it are tax-free. It’s meant to help people in the UK save more.

Types of ISAs:

• Cash ISA: you earn interest like in a regular savings account
• Innovative Finance ISA: you can earn money from riskier things, like peer-to-peer loans, property investments, and crowdfunding
• Lifetime ISA: it’s like a savings account, but the government adds a 25% bonus on top to help you put money aside for your first home or your retirement
• Help To Buy ISA: it’s an older type of ISA, and very similar to Lifetime ISA. Help To Buy ISAs are now closed to new applications, but if you opened one before November 2019, you can use it until 2029
• Stocks & Shares ISA: you earn dividends, profits, and interest from shares and bonds

What you need to remember about ISAs:

• If you’re a UK resident, you can invest money in ISAs each year up to a specific limit (£20,000 in the 2021/2022 tax year)
• You can only invest in one of each kind of ISA each year (so you can’t have two Stocks & Shares ISAs, but you can have one Stocks & Shares ISA and one Cash ISA)
• You don’t need to do a Self Assessment tax return (or pay any tax at all, for that matter) for gains from an ISA