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Individual savings accounts (ISAs)

Individual savings accounts (ISAs) who are run by financial institutions such as brokers or banks, who will impose charges. They should not be viewed as investments in themselves: they are ‘tax wrappers’ or ‘baskets’ which contain the underlying investments. The underlying investments fall into two categories:

• Cash. With a cash ISA your money is placed in deposit accounts (e.g. with banks or building societies) or National Savings products.
• Stocks and shares. This covers shares, collective investments such as unit trusts,† life insurance policies and bonds. AIM shares are excluded because they are not listed and so have their own tax benefits – see later.

The tax benefits of ISAs are:

• no capital gains tax ...