This article is part of the special series,Investing with ISAs.
Investors can place a number of different kinds of investments within their Individual Savings Accounts (ISAs). Whilecash ISAs are specifically designed to hold cash and cash-like products, stocks and shares ISAs can hold many different investment products,includingshares,funds,investment trusts,ETFsandbonds.
Below is a list of the investment products that can be placed inside your stocks and shares ISA, as well as an overview of some products that cannot be placed in ISAs.
ISA-Eligible Investments
According to the HMRC, the investments listed below can be placed within a stocks and shares ISA:
- Shares issued by companies officially listed on a recognised stock exchange anywhere in the world
- Corporate bondsissued by companies officially listed on a recognised stock exchange anywhere in the world
- UK government gilts and similar securities issued by other governments in the eurozone
- Funds (unit trusts, OEICs, ETFs and UCITS), which areauthorised by either the Financial Services Authority (FSA) or considered by the FSA to be "UK-friendly". Essentially, these funds must have 'UK reporting status' in order to be eligible. (Any funds that are domiciled outside of the UK and do not carry the 'UK reporting status' stamp are ineligible.)
- Units or shares in non-UCITS retail schemes that areconsidered by the FSA to be "UK-friendly"
- Shares in investment trusts
- Shares from an HMRC-approved employee share scheme
- Life insurance policies
- Stakeholder medium-term products
- Cash may be held in a stocks and shares ISA if the investor has plans to eventually invest this money in one of the above qualifying investments
Investments that are Not ISA-Eligible
It may seem as if there isn't much of a limit on what you can invest in within your stocks and shares ISA, but be aware that some products are not ISA-eligible.
Small-cap companies and start-upsthat are quoted on the Alternative Investment Market (AIM) are not currently eligible for inclusion in an ISA. However, the government is considering making these investments ISA-eligible in the future.
As mentioned above, funds and ETFs that do not have 'UK reporting status' also cannot be included in ISAs. Therefore, investors should ensure that funds are "UK friendly" before making a purchase.
It's also worth noting that subscription shares can be held in ISAs but warrants cannot.Warrants and subscription shares offer investors the right, but not the obligation, to buy into an investment company at a pre-determined price in the future.
Check out theHMRC websiteto find out exactly what can and cannot be placed inside a cash ISA.
The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.
FAQs
Putting money into an ISA
Every tax year you can save up to £20,000 in one account or split the allowance across multiple accounts. The tax year runs from 6 April to 5 April. You can only pay into one Lifetime ISA in a tax year. The maximum you can pay in is £4,000.
What can I put in my ISA? ›
Investment ISAs
Also known as a stocks and shares ISA, an account that allows you to hold a wide range of assets, including cash, funds, shares, gilts, bonds, exchange traded funds (ETFs), exchange traded commodities (ETCs) and investment trusts. Unlike cash ISAs, these can fall in value as well as rise.
How do I max out my ISA? ›
A simple way to do this is to set up regular savings. Someone wanting to maximise their ISA allowance in full could set up a monthly direct debit of £1,666, which adds up to just under £20,000 over the course of 12 months.
What are good things about ISA? ›
- Tax-free investing. ISA allowance for the 2024-25 tax year will remain at £20,000, of which a maximum of £4,000 can be paid into a lifetime ISA. ...
- Choice of accounts. A wide range of investment options to choose from with increased flexibility. ...
- Flexible options. ...
- Freedom to transfer.
As £20000 is the maximum you can put into any combination of ISA's in a tax year, you will need to contact the ISA provider, who you saved £2000 with, so that they can repay the sum to you and bring you back in line with the ISA rules.
Can I put 100000 into an ISA? ›
You can also access money in an ISA whenever you wish. The catch, if you want to invest £100,000, is that you can only invest £20,000 in an ISA each year.
What types of ISA are there? ›
There are 4 types of ISA :
- cash ISA.
- stocks and shares ISA.
- innovative finance ISA.
- Lifetime ISA.
To open an ISA you need to be resident in the UK or (if you live abroad) either a crown servant yourself, or the spouse or civil partner of one. To open a cash ISA, you need to be 16 plus. For other kinds of ISA, it's 18 plus. And you can't open a Lifetime ISA once you're 40 or older.
Can I have 40k in an ISA? ›
If you're a married couple, you can put up to £40,000 in ISAs between you. Tax-free. Be aware. You can choose how much or little of this £20,000 allowance you want to invest each year but do bear in mind, you can't 'carry it over' to the next year.
What happens when my ISA is full? ›
The ISA is limited to £20000. In situations where you have saved in excess of this sum in your ISAs in the tax year, you will need to discuss with your ISA providers, the removal of the excess from your ISA, incuding any interest the excess generated, and return it to you.
Becoming a millionaire is quite an achievement. Having an ISA means you can reach this in less time because you won't pay tax on income or capital gains. With careful planning and some good investment choices, you can become an ISA millionaire.
Why you should max out your ISA? ›
If you don't use your entire ISA allowance in a single tax year, you're unable to carry the allowance over to the next year. This is why it's important to make sure you invest as much as you can every tax year. Interest earned on your ISA is not only tax-free but doesn't count towards your personal savings allowance.
Is ISA good or bad? ›
For short-term goals such as an emergency fund or a holiday, ISAs and savings accounts can still be a good place to save up. For long-term savings such as retirement, however, you should consider investing to help your money grow over time.
What are the negatives of ISA? ›
The cons of a cash ISA
ISAs have a capped contribution limit of £20,000 per year, limiting how much interest you can accrue. If the interest rate you receive is lower than the rate of inflation, your money will lose value in real terms. ISAs can't be held by two people; they are for individuals only.
What does an ISA stand for? ›
ISA stands for individual savings account. ISAs are a tax-efficient way to save and invest your money.
What happens if I put more than 20 000 in my ISA? ›
If you do exceed your ISA allowance, you can contact HMRC to let them know, or if you haven't realised you've done this, they will get in touch with you after the end of the tax year to let you know what you need to do to correct your mistakes.
Can I put 200k in an ISA? ›
Every tax year, you can invest up to £20,000 into an ISA and you'll pay no tax on any growth or returns you earn. Want to know how much your money could grow over time with a stocks and shares ISA? Try our ISA calculator and we'll show you what your ISA could be worth in 20 years.
Can you have more than 85000 in an ISA? ›
If your ISA provider should collapse, it means that up to £85,000 of your savings or investments will be protected.
Can I put 50000 in a cash ISA? ›
The overall limit for ISA contributions in the 2024/25 tax year is £20,000. With a Cash ISA: You'll earn tax-free interest on your savings. You can pay into more than one Cash ISA a year.
