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. It’s going away in November 2019
• 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 2019/2020 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.