Investment ISAs (Individual Savings Accounts)

An ISA is not a product on its own, but a tax wrapper around a savings or investment product, which protects your investment or savings from being taxed.

You can invest in two separate ISAs in any one tax year: a cash ISA and an investment ISA. This can be with the same or different providers.

By using an investment ISA you invest in longer-term investments such as individual shares or bonds, or pooled investments (such as open-ended investment funds, life assurance investments or investment trusts).

The current ISA limit is £10,680 per tax year, of which up to £5,340 can be saved in cash with one provider. The rest can be invested in an investment ISA with either the same or a different provider.

If you choose to invest the whole allowance in an investment ISA, this can only be with one provider in any one tax year.

Transferring an ISA

You can transfer money from a cash ISA to an investment ISA, but not the other way round. However, you can transfer money from one investment ISA provider to another.

Not all providers accept transfers. If they do, you will need to ask the new ISA provider to arrange the transfer. ISAs should always be transferred rather than closing the old one and starting a new one (you will lose some tax advantage if you do this).

Things to consider

• You might see marketing from firms encouraging you to make full use of your ISA limits, or transfer money from cash ISAs into investment ISAs. It is a competitive market, so make sure you understand what will happen to your money and what restrictions there might be.
• Interest rates are low at the moment so the idea of putting more of your money in investments might appeal. But make sure you understand how your money will be invested.
• If you decide to switch from cash to investments, make sure you are happy with the extra risk and the fact you could lose some of your money. You will not be able to transfer back from an investment ISA to a cash ISA.

Make sure you read the information provided and:

• ask questions if anything is not clear;
• if transferring an ISA, check with your existing ISA provider for any costs of transferring out; and
• don't sign anything until you're satisfied.

""NO DECISION ON LUMP SUM INVESTMENTS AND PENSIONS SHOULD BE TAKEN BASED ON THE CONTENT OF THIS SITE. ALWAYS TAKE FULL INDIVIDUAL ADVICE FIRST. THE REGULATIONS GOVERNING TAX RATES AND INVESTMENTS MAY CHANGE IN THE FUTURE.""