An Individual Savings Account (ISA) lets you save or invest without paying tax on the income or gains during your lifetime - making it one of the easiest ways to build your wealth.
Currently, you can pay up to £20,000 each tax year across different ISA types – cash, stocks and shares, innovative finance, and lifetime ISAs (LISA).
You can only open one of each type per tax year.
If you're under 40, you can open a LISA, pay in up to £4,000 a year (which counts towards your £20,000) and receive a 25% government bonus. Changes to LISAs are currently being considered, that will limit their use for house purchases for first time buyers, but for now, LISA remain a viable savings option.
Your spouse or registered civil partner can inherit an additional ISA allowance if you die.
Any unused allowance from a tax year can’t be carried forward to the next tax year.
ISAs will be subject to inheritance tax unless invested in assets which are exempt. If you currently hold an ISA which is invested in assets on the Alternative Investment Market (AIM), the rate of IHT relief is reduced from 100% to 50% after the qualifying period in April 2026. You should seek advice if this could impact your estate planning.
You can also save £9,000 each tax year into a Junior ISA (JISA) for your children, to help them in their future. Only parents (or those with parental rights) can open JISAs, but anyone can contribute.
In short, ISAs help you grow your savings efficiently and it’s worth checking you’re using your allowance each year.
This article reflects our understanding of current legislation, which may change. While we can provide information, we can’t give you advice and therefore we recommend you seek professional advice before making any financial decisions. Investments can go down as well as up, and you may not get back the amount invested. Tax treatment depends on individual circumstances and available reliefs may vary.
The resources on Your Wealth can help you find a financial adviser in your local area.