An ISA (Individual Savings Account) is a tax-efficient account. The main perk is that you don't have to pay capital gains tax on any gains made on the investments within it, nor income tax on any dividends or interest received.
There are four different types of ISAs offered to UK taxpayers; a cash ISA, a Lifetime ISA, an innovative finance ISA and a Stocks & Shares ISA.
At TILLIT, we only offer the Stocks & Shares ISA to our customers.
In any given tax year, you can open and contribute to a maximum of one of each type of ISA. This means that if you have already opened a Stocks & Shares ISA this year, you cannot open another until the next tax-year. You can, however, transfer an ISA opened in the current year to a new provider if you want to switch. Remember, the tax year runs from 6th April - 5th April.
The maximum amount that you can contribute to ISAs in every tax year is currently £20,000 (for the 2022/23 tax year). This maximum is the total amount that can be added to all of your ISAs, not per ISA type. For example, if you have added £10,000 to a Cash ISA, you can only add up to £10,000 to your Stocks & Shares ISA in the same tax year.
Given the tax benefits associated with ISAs, it is usually a good idea to open a Stocks & Shares ISA before opening a General Investment Account, in order to maximise the tax benefits available to you.
Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change.