Editing Individual savings account (section)

==Types==
===Cash ISA===
An account which enjoys tax-free status, usually deposit accounts with £85,000 [[Financial Services Compensation Scheme]] (FSCS) protection (but client money with £50,000 protection or unprotected money is also permitted; the providers are required to make the protection clear).<ref name=FCAISAClientMoney /> These are normally offered by banks and building societies but investment firms can also offer them. It is mandatory that money held in a cash ISA be made available on request within 15 days but it is permitted to have a loss-of-interest penalty for this, and this is how [[term deposits]] are typically made available.<ref name=FCAISAClientMoneyFinalRules>{{cite web|url=http://www.fca.org.uk/static/documents/policy-statements/ps14-10.pdf|title=Client money held in Individual Savings Accounts: Feedback to CP14/9 and final rules|publisher=[[Financial Conduct Authority]]|access-date=2 June 2014|quote=the ISA regulations require customers to be able to withdraw or transfer savings within 15 or 30 days (for cash ISAs or stocks and shares ISAs, respectively)}}</ref>

====Help to buy ISA====
A help to buy ISA, introduced in 2015, is a form of cash ISA that receives a government bonus if the money is used in paying the deposit on a first home purchase.<ref name=HMRCBulletin65>{{cite web|url=https://www.gov.uk/government/publications/isa-manager-bulletin-65/isa-manager-bulletin-65|title=ISA Manager Bulletin 65|publisher=[[HM Revenue and Customs]]|access-date=16 March 2016|quote=From autumn 2015, savers can receive a bonus payment from the government towards their deposit for a first home if they satisfy certain conditions and have saved in a Help to Buy: ISA ... Where an ISA manager’s systems offer a number of products within a single ISA wrapper/account, HMRC do not expect the Help to Buy: ISA rules to prevent a customer using the rest of their annual ISA allowance in other cash ISA products available within the same cash ISA wrapper.}}</ref> The usual rule that any number of accounts can be held with the same ISA manager applies, and many providers offered the ability to hold both HTB and other cash ISA accounts with current year money in them. However, only one HTB ISA in total can be held, so if one wishes to put current year money into the HTB ISA, any other cash ISA current year money will also have to be paid into a cash ISA with the same provider.

The Lifetime ISA, announced in March 2016, replaces the HTB ISA. HTB accounts could be opened until 30 November 2019 and contributions can continue until 30 November 2029.<ref name=":0">{{Cite web|url=https://www.helptobuy.gov.uk/|archive-url=https://web.archive.org/web/20151024231227/http://www.helptobuy.gov.uk/|url-status=dead|archive-date=24 October 2015|title=Help to Buy - How does it work?|website=GOV.UK|language=en|access-date=2020-01-22}}</ref> An account holder can also have a Lifetime ISA, although the government bonus from only one of the accounts per person can be used for a purchase. Transfers from HTB to Lifetime ISA were allowed from the 2017-18 tax year, with transitional arrangements for that year only.<ref name="Budget2016LifetimeISA">{{cite web|url=https://www.gov.uk/government/publications/budget-2016-documents/budget-2016|title=Budget 2016|publisher=[[HM Treasury]]|access-date=16 March 2016|quote=3.12 The Lifetime ISA ... from 6 April 2017 any adult under 40 will be able to open a new Lifetime ISA. They can save up to £4,000 each year and will receive a 25% bonus from the government on every pound they put in. Contributions can continue to be made with the bonus paid up to the age of 50. Funds can be used to buy a first home with the government bonus at any time from 12 months after opening the account, and can be withdrawn from the Lifetime ISA with the government bonus from age 60 for use in retirement. The government will set the limit for property purchased using Lifetime ISA funds at £450,000. ... People can continue to open a Help to Buy: ISA until November 2019, as planned. They can also choose to open a Lifetime ISA, but will only be able to use the government bonus from one of their accounts to buy their first home. During the 2017-18 tax year, those who already have a Help to Buy: ISA will be able to transfer the savings they have built up into the Lifetime ISA and still save an additional £4,000.}}</ref><ref name=TheNewLifetimeISAHTB>{{cite web|url=https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508176/Lifetime_ISA_final.pdf|title=The new lifetime ISA|publisher=[[HM Treasury]]|access-date=16 March 2016|quote=Help to Buy: ISA will be open for new savers until 30 November 2019, and open to new contributions until 2029. Savers will be able to save into both a Help to Buy: ISA and a Lifetime ISA ... During the 2017-18 tax year only, those who already have a Help to Buy: ISA will be able to transfer these funds into a Lifetime ISA and receive the government bonus on those savings. }}</ref>

Help to buy ISAs have been criticised:

* Some accounts were promoted with the implication that the bonus could be put towards the deposit on a house purchase, but the bonus is only available on completion of the sale,<ref name=":0" /> and thus normally has the effect of reducing the size of the buyer's mortgage.<ref>{{Cite news|url=https://www.telegraph.co.uk/personal-banking/savings/help-to-buy-isa-shambles-so-are-these-accounts-still-worth-it/|title=Help to Buy Isa shambles: so are these accounts still worth it?|last=Murray|first=Amelia|date=2016-08-23|work=The Telegraph|access-date=2020-01-22|language=en-GB|issn=0307-1235}}</ref>
* It was reported that the scheme – which by mid-2017 had cost taxpayers some £10 billion – had done little to increase the supply of new-build homes, and instead housebuilders had increased prices and thus their profits.<ref>{{Cite news|url=https://www.theguardian.com/money/blog/2017/oct/21/help-to-buy-property-new-build-price-rise|title=Help to buy has mostly helped housebuilders boost profits|last=Collinson|first=Patrick|date=2017-10-21|work=The Guardian|access-date=2020-01-22|language=en-GB|issn=0261-3077}}</ref>

===Stocks and shares ISA===
Investors' money is invested in 'qualifying investments', which are:<ref name=HMRCGuidanceNotes>{{cite web|url=http://www.hmrc.gov.uk/isa/isa-guidance-notes.pdf|title=ISAs: Guidance Notes for ISA Managers|publisher=[[HM Revenue and Customs]]|access-date=23 October 2011}}</ref>
*cash
*[[Undertakings for Collective Investment in Transferable Securities Directives|UCITS]] authorised funds like [[unit trust]]s and [[open-ended investment company|open-ended investment companies]]
*[[investment trust]]s that satisfy various conditions
*company [[Share capital|shares]] publicly listed on one of the many recognised stock exchanges. Merely being traded is insufficient, it must be a full listing, and this excludes [[PLUS Markets Group|PLUS]]-quoted and PLUS-traded market segments, but PLUS itself is acceptable; shares in unquoted companies; warrants; futures and options. Since 5 August 2013, [[Alternative Investment Market|AIM]] shares are allowed in ISAs.<ref>{{cite news|last=Hyde|first=Dan|title=Investors free to put Aim shares into ISAs from August|url=https://www.telegraph.co.uk/finance/personalfinance/10183460/Investors-free-to-put-Aim-shares-into-Isas-from-August.html|newspaper=Telegraph|date=17 Jul 2013}}</ref>
*public debt securities such as [[government bonds|government]], [[corporate bond]]s, [[debenture]]s and Eurobonds
*from 1 July 2014, some [[core capital deferred share]]s issued by [[building society|building societies]], some types of insurance policy and other investments that were previously deemed too low in risk.

It is mandatory that money held in a stocks and shares ISA be made available on request within 30 days but it is permitted to have a loss-of-interest penalty for this.<ref name=FCAISAClientMoneyFinalRules />

===Innovative finance ISA===
Innovative finance ISAs (IF ISAs or IFISAs) became available from 6 April 2016.<ref>{{cite news |url=https://www.gov.uk/government/publications/income-tax-innovative-finance-individual-savings-account-and-peer-to-peer-loans/income-tax-innovative-finance-individual-savings-account-and-peer-to-peer-loans |title=Income Tax: Innovative Finance Individual Savings Account and peer to peer loans |work=Gov.uk |date=2015-12-08 |access-date=2016-04-14 }}</ref> They are similar to cash and S&S ISAs but designed to be used for [[peer-to-peer lending]] investments, which were not previously eligible to be held in an ISA. Only platforms with full [[Financial Conduct Authority|FCA]] authorisation (and ISA manager status) are eligible to offer IF ISAs; at launch this barred all major existing platforms because they were awaiting authorisation, leaving just eight at the time relatively minor platforms available and 86 awaiting approval.<ref name=FCAMarch2016>{{cite web|url=http://www.fca.org.uk/news/peer-to-peer-applications-for-full-authorisation|title=Statement on peer-to-peer applications for full authorisation|date=31 March 2016 |publisher=[[Financial Conduct Authority]]|access-date=19 April 2016|quote=As at 30 March 2016, eight firms have been fully authorised to operate P2P platforms. There are a further 86 firms awaiting a decision, of which 44 have interim permission}}</ref> Equity-based [[crowdfunding]], although similar to peer-to-peer lending, is not included in the eligible products for this type of ISA.<ref name=HMRCDec2015IFISA>{{cite web|url=https://www.gov.uk/government/publications/draft-legislation-innovative-finance-individual-savings-account-and-peer-to-peer-loans|title=Draft legislation: Innovative Finance Individual Savings Account and peer to peer loans|publisher=[[HM Revenue and Customs]]|date=8 December 2015|quote=a new Innovative Finance Individual Savings Account (ISA) from 6 April 2016 where interest and gains from qualifying peer to peer loans will be eligible for ISA tax advantages ... Peer to peer lending platforms are regulated by the Financial Conduct Authority (FCA) where they carry out activities detailed in Article 36H of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I 2001/544)}}</ref>

From 1 November 2016 many transferable [[debenture]]s including debt securities and bonds became eligible for inclusion provided they are issued by a company or charity. They can be included whether offered via a P2P platform or not.<ref name=altfinews20160816>{{cite news|url=http://www.altfi.com/article/2187_treasury_to_allow_bonds_and_other_debt_securities_for_innovative_finance_isa|title=Treasury to allow bonds and other 'debt securities' for Innovative Finance ISA|publisher=[[altfi news]]|first=Daniel|last=Lanyon|date=16 August 2016|quote=Investors will be able put their cash into bonds and other debt securities made through p2p and crowdfunding sites within the tax efficient Individual Savings Account (ISA) wrapper from 1 November 2016 ... the 'debenture' i.e the bond must be a 'transferable' security issued by a company or a charity}}</ref><ref name=HMRC20160816>{{cite web|url=https://www.gov.uk/government/publications/draft-legislation-innovative-finance-individual-savings-account-and-debt-based-crowdfunding|title=Draft legislation: Innovative Finance Individual Savings Account and debt based crowdfunding|publisher=[[HMRC]]|date=9 August 2016|quote=from 1 November 2016 to provide that certain debentures issued by companies and charities and offered via an electronic system (including those offered via a crowdfunding platform) can be held in an innovative finance ISA where they satisfy certain conditions.}}</ref>

The same rules with respect to subscription limits and transfers are applicable to the IF ISA as other adult ISAs, including the restrictions of current year money going to only one ISA manager, and an unrestricted number of managers for past year money.<ref>{{cite news |url=https://www.lendingworks.co.uk/blog-post/how-will-transferring-old-isa-funds-new-ifisa-work |title=How will transferring old ISA funds into a new IFISA work? |work=LendingWorks |date=2016-03-02 |access-date=2016-04-14 }}</ref>

===Lifetime ISA===
In the [[2016 United Kingdom budget|2016 Budget]] it was announced that a lifetime ISA (LISA) would be introduced from 6 April 2017 as a more flexible way to save for both home purchase and retirement. Only those aged 18 to 40 can open an account, and at the end of the tax year (or when used for purchase) a 25% bonus on contributions of up to £4,000 a year will be paid. The £4,000 is part of the overall ISA annual allowance, not in addition to it. On reaching age 50, no more money can be added to the account and eligibility for the 25% bonus ceases, but the account will still earn interest or investment returns.<ref name=":1">{{Cite web|url=https://www.gov.uk/lifetime-isa|title=Lifetime ISA|website=GOV.UK|language=en|access-date=2020-01-22}}</ref> The accounts have the same [[Inheritance Tax in the United Kingdom|inheritance tax]] treatment as other ISAs.<ref name="TheNewLifetimeISWithdraw">{{cite web|url=https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508176/Lifetime_ISA_final.pdf|title=The new lifetime ISA|publisher=[[HM Treasury]]|date=15 March 2016<!--from PDF source-->|quote=1.18 Where people are diagnosed with terminal ill health, they will be able to withdraw all of the funds (including the bonus) tax-free, regardless of the individual’s age. The definition of terminal ill health will be based on that used for pensions. ... 1.19 The Lifetime ISA will have the same inheritance tax treatment as all ISAs. Upon the death of the account holder, the funds will form part of the estate for inheritance tax purposes. Their spouse or civil partner can also inherit their ISA tax advantages and will be able to invest as much into their own ISA as their spouse used to have, on top of their usual allowance. ... 1.22 The government will also explore with the industry whether there should be the flexibility to borrow funds from the Lifetime ISA without incurring a charge if the borrowed funds are fully repaid; for example, some US retirement plans allow 50% to be borrowed up to a maximum of $50,000. }}</ref>

Permitted investments are as for cash or S&S ISAs, and as for them any number of accounts is allowed, but only one account can hold current year money. After the account has been open for at least 12 months, the money can be used for a first home purchased with a mortgage and priced up to £450,000; the money is paid to the conveyancer and can be returned to the ISA if the sale does not complete. There are restrictions in place to avoid abuse of the scheme, for instance those who purchase a home with a LISA are barred from renting the property out.<ref>{{Cite web |title=Return of Lifetime Isa exit penalty 'will delay house purchases by years' |quote=There are other downsides to the Lisa that could also put off savers. Account holders can only buy a house up to the value of £450,000 and are unable to rent out any home bought using a Lisa. |url=https://www.telegraph.co.uk/investing/isas/return-lifetime-isa-exit-penalty-will-delay-house-purchases/ |work=The Telegraph |date=23 March 2021}}</ref>

Money can also be withdrawn after reaching age 60. A person who is diagnosed with a medical condition giving a life expectancy of under one year can withdraw the full amount including bonus without penalty at any age, using the definition in the similar pension law. Any other withdrawal, including transfers to another type of ISA, incurs a 25% charge.<ref name=":1" /> Although the bonus and penalty are both 25%, those who withdraw funds for purposes not listed above will suffer a loss, for example:

:'''£1,000''' paid in + government bonus at '''25%''' = '''£1,250''' - penalty charge at '''25%''' = '''£937.50''' = net loss of '''£62.50'''

However, the government have created a precedent where this penalty charge may be reduced during periods of poor economic outlook and the LISA can effectively be used as a [[rainy day fund]]. Penalty charges were reduced from 25% to 20% on withdrawals between 6 March 2020 and 5 April 2021 during the [[COVID-19 recession|recession]] arising from the [[COVID-19 pandemic in the United Kingdom|COVID-19 pandemic]].<ref>{{Cite web |title=Lifetime ISA withdrawal charge reduced to 20% |url=https://www.gov.uk/guidance/lifetime-isa-withdrawal-charge-reduced-to-20 |work=gov.uk |date=9 June 2020 |access-date=2020-09-06}}</ref> This reduction ensured that savers making withdrawals received the full amount they had deposited.

£1.5 billion was held in LISA savings in 2022, and the [[United Kingdom cost of living crisis|2022 cost of living crisis]] fuelled in part by [[2021–2022 inflation surge|rising inflation]] led to calls to introduce a temporary penalty-free period to allow access to these savings.<ref>{{Cite web |last=Haynes |first=Tom |date=16 August 2022 |title=Savers should be allowed to raid Lifetime Isas, says their inventor |url=https://www.telegraph.co.uk/money/consumer-affairs/savers-should-allowed-raid-lifetime-isas-says-inventor/ |accessdate=2022-08-27 |work=Telegraph}}</ref><ref>{{Cite web |last=Denham |first=Katherine |date=13 August 2022 |title=My Help to Buy Isa is no help at all |url=https://www.thetimes.com/business-money/money/article/my-help-to-buy-isa-is-no-help-at-all-t92rgq2hn |access-date=2022-08-27 |work=[[The Times]]}}</ref>

===Junior ISAs===
Junior ISAs were introduced on 1 November 2011 with an initial subscription limit of £3,600, which was increased to £9,000 by the time of the 2020-21 tax year.<ref name=gov.uk>{{cite web|url= https://www.gov.uk/junior-individual-savings-accounts |title=Junior Individual Savings Accounts (ISA) |publisher=UK Government |access-date=2020-11-23}}</ref> At age 18 the JISA converts to an adult ISA.<ref name="Treasury2012Limits" /> Like adult ISAs, JISAs are available in both cash and stocks and shares types. Money cannot be withdrawn until age 18 unless a terminal illness claim is agreed or following closure of the account after the death of the child. A child can open their own account from age 16, otherwise a person with parental responsibility can do it. They are available to those who are:

* under age 18 and
* were born on or after 3 Jan 2011 or do not have a [[child trust fund]], and
* are resident and ordinarily resident in the UK, or are a UK Crown servant, married to or in a civil partnership with a Crown servant, or a dependent of a Crown servant.

Unlike an adult ISA a child can only hold a total of one cash ISA and one stocks and shares ISA, including for all money from past years, but transfers of these two accounts can be carried out between providers as for adult accounts. Up to the full JISA limit can be used for any combination of cash and stocks and shares ISA subscriptions. An additional adult cash ISA can be held between 16 and 18. In the year in which a child becomes 18 the full adult and child ISA limits can both be used. Unlike adult ISAs a JISA allows transfers from the S&S form to the cash form.

Each child ISA has a single registered contact, a person with parental responsibility. From age 16 a child can register to be their own contact and this registration cannot normally be reversed. Except in that case and adoptive parents registering, the previous registered contact will be contacted to obtain their consent to a change of contact.

=== British ISA ===
A British ISA was announced by the government in its Spring Budget 2024 with an annual allowance of £5,000 to be used only towards investment in UK companies.<ref>{{Cite web |title=Chancellor delivers lower taxes, more investment and better public services in 'Budget for Long Term Growth' |url=https://www.gov.uk/government/news/chancellor-delivers-lower-taxes-more-investment-and-better-public-services-in-budget-for-long-term-growth |access-date=2024-03-07 |website=GOV.UK |language=en}}</ref> It is expected that the £5,000 annual subscription will be in addition to the current £20,000 ISA allowance. The aim of the British ISA is to encourage investment in UK companies, so a number of bespoke rules may be created which will differentiate it from current ISAs, including on transfers and holding cash. 

The government launched a consultation on how a British ISA will work, lasting until June 2024. It is not expected to be available until 2025.<ref>{{Cite web |last=King |first=Alex |date=2024-03-06 |title=British ISA - All you need to know |url=https://generationmoney.co.uk/british-isa/ |access-date=2024-03-07 |website=Generation Money |language=en-UK}}</ref>