What an ISA is
Who this guide is for: For savers and investors who want a plain-English overview of ISA types and tax treatment — not product advice.
- Step 1Choose ISA type
- Step 2Subscribe within the annual allowance
- Step 3Hold savings or investments in the wrapper
- Step 4Interest, dividends and gains normally tax-free inside
An Individual Savings Account (ISA) is a tax wrapper. Investments held inside it can generate interest, dividends and gains without UK Income Tax or Capital Gains Tax under the ISA rules.
Common ISA types
| Type | Typical use |
|---|---|
| Cash ISA | Savings with tax-free interest |
| Stocks and Shares ISA | Funds and shares with tax-free dividends and gains inside the wrapper |
| Lifetime ISA / Innovative Finance ISA | Specialised products with extra conditions |
| Junior ISA | For children, with a separate allowance |
What ISAs do not do
- They do not remove all product fees or investment risk.
- Assets held outside the ISA can still create Dividend Tax or Capital Gains Tax — see Dividend Tax Explained and Capital Gains Tax Explained.
- Some government benefits or means tests may still count ISA assets — check the relevant scheme rules.
Compare a taxable disposal with assets held inside an ISA Use the Capital Gains Tax Calculator