An ISA is an Individual Savings Account

Investing or saving through an ISA means that you don’t pay income tax on any profit you earn from your investment . But there are options to consider and some rules as to what you can and can’t do in an ISA.

Maximum contribution

For the current tax year—i.e. 2018/2019—the maximum an adult is allowed to pay into an ISA is £20,000. (The UK’s tax year runs from 6th April until the following 5th April).

Cash or shares? Save or invest?

Although there are four types of ISA, the most popular are Cash ISAs and Stocks & Shares ISAs—we specialise in Stocks & Shares ISAs. Over time, Stocks & Shares ISAs tend to produce higher returns than cash ISAs, especially when interest rates are low.1

How Stocks & Shares ISAs work

Your money is invested in shares which are traded on stock markets. Given that share prices rise and fall, there’s a chance that you might get back less than you have invested. But share prices usually recover from price falls—it’s just a question of when and by how much. So, the longer you are able to invest for, the better.

Only one of each type of ISA a tax year

You can only currently have one of each type of ISA in any one tax year (i.e. one Stocks & Shares ISA, one Cash ISA, one Innovative Finance ISA and/or one Lifetime ISA). So, for example, you could open a Stocks & Shares ISA in the current tax year (2018/19) and pay in up to £20,000 over the next twelve months. Come the next tax year (2019/2020), you could then start a new Stocks & Shares ISA. In other words, you couldn’t have two Stocks & Shares ISAs in the same year.

You can divide your annual allowance between ISAs

You don’t have to invest your full allowance in one type of ISA—you can distribute your allowance, but you cannot invest more than £20, 000 in ISAs in any one tax year. For example, you could have £15,000 in a Stocks & Shares ISA and £5,000 in a Cash ISA.

Don’t lose your tax-free benefits

Every ISA you open is yours to keep for as long as you wish. So, you can still access your old ISAs from previous years, but you just can’t pay into them anymore. You can only contribute to this tax year’s ISA. But you can of course make withdrawals or transfer your old ISAs to help contribute towards your goal.

We manage your ISA, so you don’t have to…

When you invest with us—and if you’ve yet to use any or all of your ISA allowance—we will make sure that your money is invested through an ISA. We will also automatically set up a new ISA for you every year, so you can be certain that you’re always making full use of the tax benefits ISAs provide. If you want to transfer money you’ve invested in an ISA during the current year to us, you must transfer all of it.

Easier to manage

If you think it would be easier for you to keep all your ISAs under one roof, you can transfer all of them (or some of them) to Munnypot.

And if you exceed your annual allowance…

We will roll over anything exceeding the £20,000 annual limit into a General Investment Account (GIA) for you. Although a GIA doesn’t offer the same tax benefits as an ISA, there is no limit to how much you can invest in any tax year.

Remember, tax treatment depends on an individual’s circumstances and may be subject to change.


1Barclays Equity Gilt study, 2018

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