Compare and find investment ISAs
To find the best investment ISAs for your needs, we suggest that you compare a wide range of options, including our selections. Whether you're looking for growth or income, you can find an ISA that fits your investment strategy.
What is an investment ISA?
Unlike a cash ISA - which is a straightforward tax-free savings account - an investment ISA allows you to invest money up to a certain amount without paying tax. This runs from 6th April each year, and since 6th April 2016 the full individual ISA allowance has been set at £15,240. A investment ISA allows you invest your tax-free allowance without paying tax on any investment income you make. This can add up to a substantial saving when you consider that, on dividends paid on a non-ISA investment, an additional rate taxpayer would have to part with 42.5% in tax.
You have a variety of options when it comes to using your investment ISA allowance. You can:
- Invest your full ISA allowance of £15,240 in an investment ISA.
- Put some of your allowance into a cash ISA, and the remaining balance in a investment ISA, in whatever proportion you wish
- Use your investment ISA allowance for shares - excluding shares traded on the Alternative Investment Market (AIM) - unit trusts, investment trusts, open-ended investment companies (OEICs), life insurance policies, corporate bonds, and gilts.
Choosing an investment ISA
An investment ISA, as with all investments, involves an element of risk, so it's important that you're in a sufficiently stable financial position.
Before you open an investment ISA, make sure that:
- Your debts are under control - you've either paid them off or have affordable arrangements in place to do so.
- You have emergency savings that you can access easily if something unexpected occurs - if your car breaks down or you're made redundant, you'll need savings that you can use straight away.
If you're very new to saving and don't yet have a basic emergency fund, you may find that a cash ISA is more suitable for you at this stage. Once you've built up some accessible savings in this way, you might then want to consider an investment ISA, too.
Investment ISA tips
- You should be prepared to invest for the medium to long term with a investment ISA - for example, for five years or more.
- If you think you might require access to your cash in the next couple of years, a investment ISA may not be the right choice for you. Share prices can be very variable - especially in the current financial climate - and so if you were to withdraw your investment in the next twelve to eighteen months, you could end up with less money than you started with.
- Different investment ISAs have different investment options. These range from as little as £10 per month (e.g. through a fund) to a specified minimum investment (e.g. £500).
- Some ISA providers will give you online access to your account, allowing you to see the investment performance of your ISA and keep up to date with any charges incurred.
- If your investment ISA isn't performing as well as you'd like, you will usually be permitted to transfer it another provider. To do this, speak to your new ISA manager who will arrange the transfer, allowing you to avoid losing any tax benefits by withdrawing your cash.
- You can transfer shares you get from an HMRC-approved SAYE (save as you earn) scheme run by your employer, or a share incentive plan, into a investment component of an ISA without incurring capital gains tax, up to your annual ISA allowance.
- You will not be able to transfer any existing non-ISA shares, or shares you've inherited, into an investment ISA.
- With an investment ISA, there is greater long-term growth potential than a cash ISA - however, bear in mind that the value of your investment can go down as well as up.
- If you have an investment ISA from a previous tax year, you're permitted to move this into a current investment ISA or split it between more than one investment ISA.
- If you want to open a Junior ISA for your child, you can also invest in investment on their behalf up to a maximum of £4,080.